Markets were closed Monday in observance of President’s Day.
Despite this, the overall week remains pretty packed with new economic and earnings data as the January Personal Consumption Expenditures (PCE) report is scheduled to release Friday morning and minutes from the latest Fed policy meeting coming out Wednesday afternoon. Meanwhile, earnings are headlined by large retailers such as Walmart (WMT), Home Depot (HD), and TJX Companies (TJX) with big tech names such as Nvidia (NVDA), Alibaba (BABA), and NetEase (NTES) also reporting quarterly results.
New Data
The monthly PCE report is the major highlight of the week along with the Fed minutes and new housing data for January. Overall prices are expected to have risen 0.4% last month following a 0.1% increase in December. Additionally, core prices are estimated to grow at 0.4% as well after increasing 0.3% the previous month. The core price data from the PCE report is the Federal Reserve’s preferred gauge of inflation and the current projections point to a still high 4.8% annual inflation rate that has stayed mostly flat since October’s 0.3% monthly rise.
The January Personal Consumption Expenditures report on Friday is also projected to show personal income and spending rise 0.9% and 1.3% respectively. Both estimates are far above the 0.2% increase in income and 0.2% decrease in spending reported in December. The solid income and spending numbers along with an expected modest increase from 194,000 to 200,000 initial claims point to a still stable economy that the Fed believes can handle additional tightening in order to continue its fight against inflation. The near-record low unemployment rate and initial claims hovering below where they were before the pandemic only bolster that position.
Housing data estimates also reinforce a healthy economy although some data has been less bullish on the economy but appears to show a normalizing housing market more so than a crashing one. New home sales are projected to rise from an annualized rate of 616,000 to 620,000 sales in January while existing sales are expected to have increased from a rate of 4.02 million to 4.12 million.
Retail and Tech Earnings
Walmart and Home Depot are two of the biggest names reporting this week with both reporting before the market opens on Tuesday. Walmart is projected to report an ever so slightly lower earnings-per-share (EPS) of $1.51 compared to $1.53 in its year-ago quarter. Home Depot on the other hand is expected to increase its EPS from $3.21 to $3.29 for the first quarter of 2023. The modest change in earnings-per-share isn’t too surprising from two defensive stocks that were mostly back to normal a year ago in regards to the pandemic.
Meanwhile, technology companies continue the trend of painting a less rosy picture with Nvidia’s EPS projected to fall from $1.32 to $0.80. Big Chinese tech companies Alibaba and NetEase similarly are expected to show a drop in EPS with Alibaba estimated to drop from $16.87 to $16.52 and NetEase expected to fall from $9.92 to $7.82. Tech companies have understandably been unable to maintain the growth they experienced at the height of the pandemic when everyone was quarantined and had nothing better to do. An unfortunate situation for big tech but no one is complaining about that.
Economic Events this Week
Tuesday
- 10:00 ET - Existing Home Sales
Wednesday
- 10:30 ET - EIA Crude Oil Inventories
- 14:00 ET - FOMC Minutes
Thursday
- 8:30 ET - Continuing Claims
- 8:30 ET - Initial Claims
- 8:30 ET - GDP - Second Estimate
- 10:30 ET - EIA Natural Gas Inventories
Friday
- 8:30 ET - Personal Income & Spending
- 8:30 ET - PCE Prices
- 8:30 ET - New Home Sales
Earnings Reports This Week
Tuesday:
Before the bell:
WMT, HD, MDT, FLR, TECK, WLK, TAP, PEG, DAN, ARNC, HUN, IR
After the bell:
CZR, UNVR, FANG, UFPI, AGR, CHK, BCC
Wednesday:
Before the bell:
STLA, BIDU, TJX, CSTM, VRT, NI, GRMN, BCO
After the bell:
NVDA, PXD, MOS, FNF, DVA, EBAY, ATUS, APA, CTRA
Thursday:
Before the bell:
BABA, VIPS, NTES, LNG, CBRE, PCG, GPC, MRNA, IMOS, AEP, PWR
After the bell:
WBD, EOG, SQ, BKNG, LYV, EIX, CVNA, MELI, MTZ, INTU, OPEN, SWN, PBA
Friday:
Before the bell:
DINO, CM, FYBR, GTN, EVRG, CRI, SSP, CNK
