Stocks rose Monday ahead of a week packed with earnings from giants such as Microsoft (MSFT) and Tesla (TSLA). Additionally, it's a pretty busy week for economic data as the December Personal Consumption Expenditures (PCE) report is on the docket for Friday with GDP and unemployment claims data coming out Thursday morning.
Lastly, the headline news to start the week was the continuing trend of tech giants cutting down their workforce with Spotify (SPOT) being the latest example as it announced job cuts of 6% of its total workforce. Investors have been reacting positively to the news with both Spotify and Microsoft seeing their share price rise following the announcement of layoffs as the cost cutting moves have been welcomed by investors.
Economic Data
The PCE report is the primary source the Federal Reserve used to gauge inflation with a particular focus on the movement of core prices which exclude food and energy price changes. Core prices are projected to rise 0.3% in December following a 0.2% jump the previous month. As of November, core prices have risen 4.7% year-over-year which is down from the 5.2% reported in September.
The PCE report is also expected to show personal income rising 0.2% following a 0.4% gain in November. Meanwhile, personal spending is projected to fall 0.1% after its modest 0.1% rise the previous month. The results from the PCE report should give some indication of what the Federal Reserve’s next move will be in regards to interest rate hikes as the central bank looks to continue pushing down inflation while trying to maintain the economy as well.
Outside of the PCE report, the fourth quarter gross domestic product (GDP) is expected to show 2.6% economic growth following a 3.2% increase in the third quarter. Meanwhile, initial unemployment claims are projected to rise to 205,000 claims from 190,000 claims the previous week. Lastly, new home sales are expected to fall from an annualized rate of 640,000 in November to a rate of 614,000 last month.
Earnings Season Nears its Peak
Earnings season is in full motion now with massive companies reporting from various industries across the economy. Microsoft, International Business Machines (IBM), and Intel (INTC) highlight tech companies reporting with network providers in Verizon (VZ), AT&T (T), and Comcast (CMCSA) also being a key theme of the week. Airlines and aircraft manufacturers are highlighted by American Airlines (AAL), Southwest (LUV), and Boeing (BA).
Lastly, everyone’s favorite technology/automotive company run by a CEO who owns a social media company, Tesla, is set to report results after market close on Wednesday.
Economic Events this Week
Tuesday
- 10:00 ET - Consumer Confidence
Wednesday
- 8:15 ET - ADP Employment Change
- 10:30 ET - EIA Crude Oil Inventories
Thursday
- 08:30 ET - Initial & Continuing Claims
- 08:30 ET - Personal Income & Spending
Friday
- 8:30 ET - Nonfarm Payrolls
- 8:30 ET - Average Hourly Earnings
- 8:30 ET - Unemployment Rate
Earnings Reports This Week
Tuesday:
Before the bell:
VZ, JNJ, GE, LMT, RTX, TRV, MMM, DHR
After the bell:
MSFT, COF, TXN, CNI, ISRG, SLGN, WAL, FFIV
Wednesday:
Before the bell:
ELV, T, BA, PGR, GD, ABT, NEE, USB, ASML, FCX
After the bell:
TSLA, IBM, FLEX, LRCX, STLD, CSX, AMP, URI
Thursday:
Before the bell:
VLO, CMCSA, ADM, AAL, LUV, DOW, NOC, SAP, NUE
After the bell:
INTC, V, LHC, KLAC, WRB, EMN, OLN, TFII
Friday:
Before the bell:
CVX, HCA, AXP, CHTR, CL, ALV, BAH, ROP
