After trading both higher and lower during Monday's trading, stocks put an end to a five-session losing streak.
Energy stocks led the gains today with the sector rising 2.7% as oil prices hit a six-week high after OPEC predicted larger demand for crude oil, while the Health Care (-0.82%) and Materials (-0.60%) sectors both lost ground.
Bad news out of China sent shares of Chinese tech companies sharply lower after it was announced that Ant Group could be split up soon. Meanwhile, fake news sent cryptocurrencies lower after a fake press release claiming that Litecoin would be accepted at Walmart (WMT) stores sent the coin sharply higher, only to see it, and other cryptocurrencies drop once it was revealed to be a hoax.
Despite there not being many earnings reports this week, there should be no shortage of news for investors as everything from inflation to spending and consumer sentiment take a turn in the spotlight.
InflationFirst up this week is the Consumer Price Index slated for Tuesday morning. Investors will get an important inflation follow-up to last Friday’s Producer Price Index with the Consumer Price Index report.
Price increases on the producer side of things cooled off in August, with core PPI prices rising 0.6% after rising 1.0% in July.
As far as the consumer goes, core-CPI is expected to show slowing in the rate of increase with a 0.3% rise in August.
If those estimates are accurate, the peak inflation narrative will be dealt its second consecutive dub from the CPI report as year-over-year inflation would moderate further to an annual rate of 4.2%. This would follow July’s moderation to an annual rate of 4.3% from June’s 4.5%.
Investors could be concerned that a higher-than-expected number would signal inflation could rise again, but a small miss shouldn't worry investors too much as transitory price pressures continue to muddy the water.
Prices for air travel and hotel accommodations - among other things - plunged during the thick of the pandemic, and remained low for a while thereafter. Now, with the trailing 12-month window overlapping the recovery and missing the downturn altogether, Fed Chair Jerome Powell has said that these factors are “temporarily elevating reported inflation” and that these effects “should wash out over time.”
Consumer UpdatesCome Thursday, investors will turn their attention to the August Retail Sales report, which is expected to show a continued decline in consumer spending. Meanwhile, investors will gain further insight on the consumer via the University of Michigan’s preliminary consumer sentiment report for September slated for Friday morning.
Retail Sales for the month of August are expected to decline 0.2% after dropping 1.1% in July. The decline in July was mostly due to a drying up of consumer stimulus money and other government support. Meanwhile, this August report should be an interesting read as it will surely be influenced by the same variables which sent consumer sentiment to its worst plunge since 1978: persistent inflation and surging delta variant cases.
Speaking of consumer sentiment, the University of Michigan will release preliminary September consumer confidence numbers, which are expected to rebound slightly to a reading of 72.0 after plunging to 70.3 in August from 81.2 in July. With last month’s report representing the worst drop in confidence since 1978, any suggestion of a bounce back consumer sentiment could help abate fears of a stagnating recovery.
Economic Events this WeekTuesday - 8:30 a.m. - CPI and Core CPI
Wednesday - 9:15 a.m. - Industrial Production - 9:15 a.m. - Capacity Utilization - 10:30 a.m.- EIA Crude Oil Inventories
Thursday - 8:30 a.m. - Initial & Continuing Claims - 8:30 a.m. - Retail Sales
Friday - 10:00 a.m. - Preliminary University of Michigan Consumer Sentiment