Markets were flat to start the new week after a massive surge to end last week as the October Consumer Price Index (CPI) report was lower than expected leading to rising speculation that the Federal Reserve will slow the pace of interest-rate hikes.
Comments from Federal Reserve Governor Christopher Waller on Monday dampened those hopes though as he said that policymakers have a way to go before ending rate hikes.
Looking ahead, the rest of the week is packed with new economic data and earnings results. New housing data is the focus of economic reports while large retail businesses are the main theme of earnings reports. Meanwhile, investors still weigh the possible outcomes from this year’s midterm elections as the Democrats maintain control of the Senate and the House of Representatives remains a tossup with Republicans currently projected to take a slim majority.
Inflation Update
Starting off the week is the October Producer Price Index (PPI) report releasing on Tuesday morning. Overall producer prices are projected to rise 0.5% while core prices (excluding food and energy) are expected to increase 0.4%. The PPI report comes after CPI numbers came in lower than expected on Thursday last week with consumer prices rising 0.4% in October and core prices adding 0.3%. The results from October’s PPI report will either increase speculation that the Fed will start trimming rate hikes or dampen those expectations should prices rise more than projected.
Housing and Industrial Data
New housing data comes towards the end of the week with Thursday’s housing starts and building permits updates for October and Friday’s release of existing home sales last month. All three reports are projected to show a decrease from the previous month with housing starts expected to come in at 1.42 million following September’s 1.44 million. Building permits are estimated to drop from 1.56 million to 1.52 million while existing sales are projected to fall from 4.71 million to 4.38 million in October.
Meanwhile, industrial production is expected to stay flat in October following September’s 0.4% rise with capacity utilization projected to stay flat at 80.3%. Lastly, initial unemployment claims are estimated to drop slightly from 225,000 to 222,000 new claims.
Retails Headline Earnings Reports
Large retailers are the focus of earnings reports this week with the likes of Walmart (WMT), Target (TGT), Home Depot (HD), Lowe’s (LOW), Macy’s (M), TJX Companies (TJX), Kohl’s (KSS), Gap (GPS), Bath & Body Works (BBWI), and Foot Locker (FL) all reporting.
It’s not looking good this quarter for most of those names compared to a year-ago with only home improvement retailers Home Depot and Lowe’s expecting an improvement in earnings-per-share. Macy’s, Kohl’s, and Bath & Body Works are expecting the biggest drops in earnings-per-share from the group above.
Other big names outside of retailers set to report this week include Nvidia (NVDA), Cisco (CSCO), Tencent Music (TME), and Alibaba (BABA).
Economic Events this Week
Tuesday
- 8:30 ET - Housing Starts
- 8:30 ET - Building Permits
Wednesday
- 10:00 ET - Existing Home Sales
- 10:30 ET - EIA Crude Oil Inventories
Thursday
- 08:30 ET - Continuing Claims
- 08:30 ET - Initial Claims
Friday
- 9:45 ET - IHS Markit Manufacturing PMI - Prelim
Earnings Reports This Week
Tuesday:
Before the bell:
WMT, HD, BEKE, TME, ARMK, BERY, SE, HUYA, ENR
After the bell:
AAP, VREX
Wednesday:
Before the bell:
TGT, LOW, TJX, SR, ONON
After the bell:
CSCO, NVDA, BBWI, CPRT, CPA, HI, HP, SONO
Thursday:
Before the bell:
BABA, NTES, M, BJ, KSS, DOLE, BV, GFF, NJR, PLCE, WB
After the bell:
AMAT, ROST, GPS, STNE, WSM, POST, PANW, KEYS, WWD, FTCH, GLOB
Friday:
Before the bell:
JD, FL, ATKR, SPB, BKE, TWST
