The retail sector will be in focus this week after a string of frenzied deals on Wall Street. Quarterly financials from big box store Walmart (WMT) and other consumer giants are in line, except for the April retail sales report due on Tuesday.
Investors will be watching for more comments from Fed officials including Chairman Jerome Powell as inflation continues to heat up in the U.S. economy.
After a vicious sell-off, U.S. stocks ended a sixth straight weekly loss on Friday. Worries about rising price levels and the prospect of an economic slowdown reignited further market volatility.main indicators The previous day’s rebound turned positivebut remained near 2022 lows after the S&P 500 fell below 4,000 and hovered around bear market territory for much of the week.
It is defined as a close of at least 20% from the most recent record high.
“The question remains whether this rally signals the end of the sell-off,” Quincy Krosby, chief equity strategist at LPL Financial, said in a note, adding that analysts will be watching the 200-day moving average and whether resistance is breached. “Furthermore, although price action is key, the rise in volume indicates buyer interest at these levels.”
“Given the history of bear markets, coupled with the fact that the Fed has just started a rate hike cycle and wants to see financial conditions continue to tighten to bring demand back further, this rebound is likely to weaken,” Crosby added.
Inflation and Fed Speech
The wild swings in major stock indexes coincided with two major inflation reports last week. Market participants are concerned that the soaring price levels may have shifted from “temporary” to “entrenched” in the U.S. economy.
The producer price index (PPI) released on Thursday showed wholesale prices rose 11% year-on-year last month, only marginally unchanged from an all-time high of 11.5% in March, compared with Wednesday’s increase. The Consumer Price Index (CPI) reflects another red-hot reading A year-on-year increase of 8.3%.
“The market has been volatile, but we haven’t bottomed out,” said equity analyst at Bruderman Asset Management Akshata Bailkeri told Yahoo Finance. “The Fed has indicated that they have flexibility in how they handle inflation data.”
Markets digested a flurry of comments from Fed officials in response to last week’s latest inflation snapshot in Washington.in a Yahoo Finance Live Interview On Wednesday, St. Louis Fed President James Bullard said the high reading worries central bank policymakers and reinforces the need to raise interest rates.
“Inflation is broader and more persistent than many people think, and the Fed is going to have to act to control it, and we have a plan in place,” Bullard said in the interview.
last week, Atlanta Fed President Rafael Bostic and Cleveland Fed President Loretta Mester Both told Yahoo Finance that at least at the June and July meetings, a 0.50% change was their baseline forecast and signaled a 0.75% rate hike.
Investors will have more Fed speeches to consider in the coming days, with Fed Chairman Jerome Powell speaking at a conference hosted by the Wall Street Journal on Tuesday afternoon and speeches by other central bankers scheduled for Friday.
Chris Zaccarelli, chief investment officer at the Alliance of Independent Advisers, said in a recent email: “The troubling fact is that the Fed will need to raise rates faster and to the extent that many desired level.” “With at least four 50 basis point hikes this year, not three or fewer, we will continue to be cautious on risk assets.”
On the earnings front, a slew of quarterly reports from the retail giant could provide insight into the state of U.S. inflation and how consumers are responding to rising prices.
Walmart, the largest U.S. retailer, is scheduled to report results before the market opens on Tuesday. The company expects adjusted EPS of $1.48 on revenue of $139.23 billion, according to the Bloomberg Consensus Estimate, down 12% on adjusted EPS and 1% year-over-year revenue growth.
The big-box retailer expects full-year net sales growth of about 3% and same-store sales growth excluding fuel of more than 3%. Operating income is expected to increase by about 3%, while e-commerce growth is expected to slow to about 1.9%, compared with 37% growth last year, as more consumers shop in brick-and-mortar stores as more consumers return to shopping shop shopping.
The index hit an all-time high on Jan. 3, with the seven largest stocks in the S&P 500 losing a combined $3.2 trillion in market value since that date, according to Bespoke Investment Group. While most stocks were down sharply, Walmart was one of the few gainers — up 2.35% year-to-date through Friday’s close.
In a busy week for retail data, the Commerce Department’s monthly retail sales report for April, due on Tuesday, is expected to show retail sales likely rose 1.0% last month, compared with a 0.5% gain in March, with headline figures excluding autos expected That was up 0.4 percent from 1.1 in the previous month, according to Bloomberg consensus data.
“Natural gas spending continued to contract sharply as prices retreated from record highs in March, weighing on both overall and excluding auto measures,” Bank of America analysts wrote in a recent report. “Excludes autos, natural gas , building materials and restaurants, core control sales should grow steadily, indicating continued strength in spending on merchandise.”
on Monday: Empire Manufacturing, May (15.0 expected, 24.6 last month), March long-term TIC net outflows ($141.7 billion last month), March total TIC net outflows ($162.6 billion last month)
Tuesday: April retail sales up MoM (1.0% expected, 0.5% last month, 0.7% revised upward), retail sales excluding autos, MoM, April (0.4% expected, 1.1% last month, Revised 1.4%), excluding retail sales of autos and natural gas, MoM, April (0.7% expected, 0.2% last month, revised up to 0.7%), retail sales control group, April (0.8% expected, last month) -0.1%, revised up to 0.7%), industrial production, MoM, April (0.5% expected, 0.9% last month), capacity utilization, April (78.5% expected, 78.3% last month), manufacturing ( SIC) production, April (0.4% expected, 0.9% last month), March business inventories (1.9% expected, 1.5% last month), May NAHB Housing Market Index (75 expected, this month 77 last month)
Wednesday: MBA Mortgage Applications, Week Ended May 13 (2.0% Previous Week), April Housing Starts (1.760k expected, 1.793 million last month), April Housing Starts MoM (-1.8% expected, 0.3% ) last month), April building permits (1.812 million expected, 1.873 million last month, revised down to 1.870 million), building permits, MoM, April (-3.1% expected, 0.4% last month, revised down to 0.3%)
Thursday: Philly Fed Business Outlook Index, May (16.5 expected, 17.6 last month), initial jobless claims, week ended May 14 (200,000 expected, 203,000 prior), continuing jobless claims, ended May 7 day of the week (expected 1.330 million, last month 1.343) week),
April Existing Home Sales (5.63 million expected, 5.77 million last month), April Existing Home Sales MoM (-2.5% expected, -2.7% last month), April Leading Index (0.0% expected), 0.3 the previous month %)
Friday: Important reports not scheduled for release
After market close: Take-Two Interactive (TTWO)
After market close: Important reports not scheduled for release
After market close: Important reports not scheduled for release
Alexandra Semenova is a reporter for Yahoo Finance.Follow her on Twitter @alexandraandnyc