Markets started the week on a positive note as the S&P 500 rose 0.85% and the NASDAQ gained 1.55% Monday.
The Federal Reserve is scheduled to meet virtually later this week for the traditional Jackson Hole conference, with Fed chair Jerome Powell scheduled to speak on Friday. Another large batch of economic data is set to be released this week with new home sales, initial unemployment claims, personal income and spending, and PCE prices set to come out.
Lastly, some big names are still set to report earnings with Best Buy (BBY), Salesforce (CRM), Dell (DELL), HP (HPQ), and Toronto-Dominion Bank (TD) headlining the list.
Fed Goes Virtual
The Fed is foregoing its annual trip to Jackson Hole, Wyo. to instead hold a virtual meeting on Thursday due response to the pandemic and fast spreading delta variant. Jerome Powell, Fed Chair, is set to speak on Friday. On everyone's mind will be when the central bank might start to taper its asset-purchase program, although with Delta raging across much of the country, the Fed likely won't feel as much pressure to start tapering soon.
The Fed is juggling tightening these very loose policies while the economy is still recovering from the pandemic as its attempts to find the Goldilocks zone for the best speed of the economic recovery to avoid a potential overheating economy. The labor force participation rate remains far below where it was before coronavirus and the unemployment rate is still above 5%. Shortages of everything from restaurant workers to shipping containers are still causing problems, including price increases, across the economy.
The Fed's job will be to keep monetary policy loose enough that unemployment continues to fall, while not so loose as to allow inflation to run wild. Beginning to taper asset purchases is seen as the first step toward a more normal monetary policy regime and had been expected to start as soon as September, but with Covid infections back near their highs from last summer in some places, it seems like Fed may be able to wait a little longer.
Economic Data
Speaking of inflation, the Fed’s preferred measurement for price changes, PCE prices, is scheduled for Friday morning and expected to show a 0.4% rise in July, down from 0.5% the previous month. Personal income and spending data will also come out Friday morning and estimates are currently for a 0.2% and 0.4% increase, respectively. Income rose just 0.1% in June while spending gained 1.0%.
Meanwhile, new home sales data is set for Tuesday morning with economists estimating sales in July at an annualized rate of 680,000 homes, following June’s 676,000. Existing home sales data for July was released this morning, showing homes sold at an annualized rate of 5.99 million from 5.86 million. Lastly, initial unemployment claims are expected to stay relatively flat with estimates around 355,000 following last week’s 348,000 claims.
Earnings
Finally, a few big names remain for quarterly reports with retailers such as Best Buy, Nordstrom (JWN), Urban Outfitters (URBN), Dick’s Sporting Goods (DKS), Williams-Sonoma (WSM), Dollar General (DG), Gap (GPS), and others on the docket. These reports should give an interesting look into how brick and mortar based businesses are performing with the economy reopened for an extended period now and people continuing to buy everything they can on Amazon (AMZN) and other online retailers. Dell and HP meanwhile lead hardware manufacturers set to report this week while Toronto-Dominion and Royal Bank of Canada (RY) lead financial institutions.
Economic Events this Week
Tuesday
- 10:00 a.m. - New Home Sales
Wednesday
- 8:30 a.m. - Durable Orders
- 10:30 a.m.- EIA Crude Oil Inventories
Thursday
- 8:30 a.m. - Initial & Continuing Claims
Friday
- 8:30 a.m. - PCE Prices
- 8:30 a.m. - Personal Income
- 8:30 a.m. - Personal Spending
Earnings Reports this Week
Tuesday:
Before the bell:
BBY, MDT, BMO, AAP
After the bell:
JWN, INTU, TOL, URBN
Wednesday:
Before the bell:
RY, DKS, KC
After the bell:
CRM, WSM, ULTA, NTAP, ADSK
Thursday:
Before the bell:
TD, DG, DLTR, CM, MOMO, BURL, SJM
After the bell:
DELL, HPQ, GPS, VMW, WDAY
Friday:
Before the bell:
BIG, HIBB
Sector and Industry Sentiment
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