What to know this week

The S&P 500 (^GSPC) closed above 5,000 for the first time on Friday, with all three major averages posting a positive week for the 13th time in the last 14 weeks.

With few economic catalysts over the past week, investors digested a series of company results that came in better than expected. At the same time, comments from Federal Reserve officials largely reiterated the central bank's position that greater confidence in inflation's downward trajectory is needed.

The week will bring new challenges to the market's recovery, however, with new data on inflation and consumer spending highlighting the economic calendar. On the corporate side, about 15% of S&P 500 companies are expected to report results, including John Deere (DE), Coinbase (COIN), Airbnb (ABNB), and Shopify (SHOP).

Price check

On Tuesday morning, investors will know the Consumer Price Index (CPI) for January. Wall Street expects an annual gain of 2.9% for the headline CPI, which includes the price of food and energy, a notable decline from December's headline figure of 3.4%. Prices are expected to rise 0.2% month-on-month, in line with December's increase.

On a “core” basis, which excludes food and energy prices, inflation is expected to have increased by 3.7% year-on-year, a slowdown from the 3.9% rise seen in December. Monthly core price increases are expected to be 0.3%, unchanged from the previous month.

“We expect further deflation in core goods this month, driven primarily by weak used car prices,” Diego Anzoategui, an economist at Morgan Stanley, wrote in a note to clients Thursday. “The gradual deceleration is confirmed, but service inflation remains persistent, with a certain deceleration in rent inflation but a slight rebound in insurance and hotel prices.”

Consumer Status

Part of the soft landing thesis that has dominated markets in recent months is driven by consistently stronger-than-expected consumer spending data. A new reading of this trend should greet investors on Thursday with the January retail sales report. Economists expect retail sales to have fallen 0.2% in January from the previous month.

Bank of America U.S. economist Michael Gapen expects “weak” numbers due to seasonal factors and widespread winter storms that likely disrupted retail spending in January. But Gapen doesn't think this changes the overall consumer narrative.

“However, sifting through the noise, the consumer appears healthy, with upside risks to spending due to accelerating real wages,” Gapen wrote in a note to clients.

The real wage measure Gapen refers to, which is the wage Americans see after subtracting overall inflation from wage growth, was recently listed in the Yahoo Finance Chartbook as a reason why the U.S. economy avoided recession amid higher interest rates.

A final look at traditional automobiles

After Tesla's (TSLA) earnings report disappointed investors, traditional automakers Ford (F) and GM (GM) surprised to the upside. Stellantis (STLA), the parent company of Chrysler and Fiat, is set to report Thursday, making it the last big three automaker to report results this cycle.

Yahoo Finance Pras Subramanien reports: While the United Auto Workers (UAW) strike that extended into October will likely impact operating margins, Stellantis is expected to see revenue jump more than 5% to 189, 3 million euros and its adjusted net profit increased by 9.7% over one year to reach 18.4 billion. euros, according to Bloomberg estimates.

Stellantis CEO Carlos Tavares has been criticized in the past for not moving faster on the company's electric transition; it now seems prescient, as demand for electric vehicles has apparently declined in recent months. Shares of Big Three automakers Ford and GM jumped following strong earnings reports, as the two Michigan-based automakers' traditional gas-powered businesses forecast robust 2024 profits.

Investors will expect Stellantis to offer more of the same with prospects of growing profits and limiting capital spending on electric vehicles.

The scope of income is expanding

Overall, the benefits are increasingly positive. With 75% of S&P 500 companies having earnings released, the benchmark index is on track to report its second consecutive quarter of profit growth. Notably, analysts expect earnings growth to continue over the next two years.

In a note to clients on Friday, Deutsche Bank chief equity strategist Binky Chadha pointed out that 83% of U.S. companies beat earnings estimates. According to Chadha's research, this is the highest rating in two years and “well above the upper end of its pre-pandemic range.” It's also significantly higher than other countries' beat rates, which could explain why U.S. stocks outperform other markets.

“Such high rates have historically only been observed in the early stages of recovery from major cyclical downturns,” Chadha wrote.

Several strategists recently noted a trend similar to that of Yahoo Finance in explaining how the S&P 500 could reach new highs later this year without the outsized contributions from a few big tech stocks that have driven market action of late.

“As investors stop worrying about exactly when the Fed will start cutting rates, I think we'll see a lot of these companies outside of the Magnificent Seven experience pretty strong earnings growth, which will allow them to “doing pretty well in the round,” Goldman Sachs equity strategist Ben Snider told Yahoo Finance.

Weekly calendar


Economic data: New York Fed one-year inflation expectations, January (previously 3.01%)

Earnings: Avis Budget Group (CAR), Monday.com (MNDY), Waste Management (WM), Zoominfo Technologies (ZI)


Economic data: NFIB Small Business Optimism, January (91.9 previously) Consumer Price Index, month-over-month, January (+0.2% expected, +0.3% previously); Core CPI, month-on-month, January (+0.3% expected, +0.3% previously); CPI, over one year, January (+2.9% expected, +3.4% previously); Core CPI, year-on-year, January (+3.7% expected, +3.9% previously); Real average hourly wage, over one year, January (+0.8% previously)

Earnings: Airbnb (ABNB), AutoNation (AN), Biogen (BIIB), Coca-Cola (KO), Datadog (DDOG), Hasbro (HAS), Instacart (CART), Marriott International (MAR), Lyft (LYFT), MGM Resorts (MGM), Moody's (MCO), Robinhood (HOOD), Shopify (SHOP), Upstart (UPST), Zillow Group (ZG)


Economic Data: MBA Mortgage Applications, Week Ending February 9 (+3.7%)

Earnings: Albermarle (ALB), Cisco (CSCO), CME Group (CME), Generac (GNRC), Kraft Heinz (KHC), Occidental (OXY), Sony (SONY), Sunoco (SUN), Twilio (TWLO)


Economic data: first unemployment claims, week ending February 10 (previously 218,000); Retail sales, month-on-month, January (-0.2% expected, +0.6% previously); Retail sales excluding auto and gasoline, January (+0.2% expected, +0.6% previously); Import prices, month-on-month, January (-0.1% expected, +0.0% previously); Export prices, month-on-month, January (-3.2% previously); Industrial production, month-on-month, January (+0.4% expected, +0.1% previously); NAHB Real Estate Market Index, February (previously 44)

Earnings: Applied Materials (AMAT), Coinbase (COIN), Crocs (CROX), DoorDash (DASH), DraftKings (DKNG), John Deere (DE), Penn National (PENN), Oatly (OTLY), Roku (ROKU), Stellantis ( STLA), The Trade Desk (TTD), Toast (TOST), Wendy's (WEN), Yeti (YETI)


Economic data: Producer price index, month-on-month, January (+0.1% expected, -0.1% previously); PPI, year-on-year, January (+1% previously); University of Michigan Consumer Sentiment, February preliminary data (79.0 expected, 79.0 previously); Month-to-month building permits, January (1.5% expected, 1.8% previously)

Gains: Air Canada (ACDVF), Cinemark (CNK)

Josh Schafer is a reporter for Yahoo Finance. Follow him on @_joshschafer.

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