Housing and retail data could be the next catalyst for the market next week
Stocks could continue to move higher into the dog days of August, as investors await earnings from major retailers and fresh housing and consumer data. Economic reports next week include housing starting Tuesday and existing home sales on Thursday. Home sales are expected to fall more than 6%, according to Dow Jones, due to the impact of rising mortgage rates on homes. Retail sales, scheduled for Wednesday, are expected to grow only marginally and be below June’s 1% gain. “I think if you see something, whether there’s a big drop in housing data or retail data, that could be enough to make it worse,” said Keith Lerner, market strategist and co-CIO. reduce this increase or put pressure on it. at Truist. “But I think what you’re seeing is – when you go through earnings season and have to wait a long time to get to the next Fed meeting – it’s more positioning.” Lerner said investors are playing catch-up, increasing their exposure to equities after two major economic reports on jobs and inflation came in better than expected. The July jobs report showed the economy added 528,000 jobs, more than double expected. The consumer price index was flat in July, meaning prices were flat from the previous month, although they were up 8.5% year over year. Catch-up investors Lerner said the one-of-a-kind punch from that data encourages investors to think the recession may have been priced in too quickly and that inflation may be peaking. gives the Fed flexibility. “This positive data comes at a time when investors are very lightly positioned and out of place,” he said. That has forced many large investors to add to their holdings and that has supported the market. Stocks were higher this past week, with energy and financials leading the way. The S&P 500 was on track Friday afternoon with a 3% weekly gain, while the Nasdaq was up 2.7% for the week. The Russell 2000 is the better-performing index, up 4.7% for the week as small-cap stocks continue to outperform. “It feels like July is the month we celebrate better than scary earnings, it feels like August is the month we celebrate,” said Art Hogan, chief market strategist at B. Riley Wealth. Scary better economic data.” Management. Next week’s earnings reports are expected from Walmart and Home Depot on Tuesday and Target on Wednesday. Those reports will provide updates on consumer spending trends, as well as how retailers are dealing with rising costs and inventory and supply chain issues. “This is the week we begin the consumer portion of earnings season. After several big box stores talk about inventory issues, I would hardly think expectations could be much lower,” Hogan said. speak. “A good part must be priced.” Gargi Chaudhuri, BlackRock’s head of iShares investment strategy in the Americas, said a key development for markets is the Inflation Reduction Act, which will pass Congress on Friday after the Senate through the. This is unprecedented government spending on climate and clean energy, and investors should be exposed to these groups, she said. Chaudhuri noted that interest has increased in BlackRock’s iShares global clean energy ETF. ICLN has gained about 4.9% in the past week and 23% in the past month. TAN, the Invesco Solar ETF also benefited. That ETF has gained 4.8% for the week and 25.8% in the past month. Stocks have edged higher this summer, despite the views of many strategists, who expect the inflation-defying Fed to continue to weigh on markets. “I really think right now we’re having a painful exchange,” says Truist’s Lerner. He describes himself as being in the camp of skepticism, but he says the rally has left investors wondering if they are being too negative. “It starts to have people question their views and feel uncomfortable… It forces the underweight to take on some new positions,” he said. Chaudhuri said she was also skeptical of the rally and said she had recommended continued investment but in a defensive position. She said she would look at strategies like investing in healthcare or mitigating volatility. She also said fixed income is once again a good hedge for a stock portfolio. “The market is now perceiving that there’s a Fed pivot coming. I don’t necessarily believe that’s the case,” she said. She said the July CPI report helped encourage that view. “We’re happy to see inflation cool a bit, but there’s nothing in the data that makes us think we’ll see 2% inflation. It still points to inflation at year-end of around 5 percent. %. It’s too early for a Fed turnaround,” she said. Technically Chart Strategists say that the S&P 500 could face more difficulties, but it is making progress towards reclaiming old highs. First, the S&P 500 index rallied above its June high of 4,177 over the past week, boosting the bullish case. Technicians are also wondering if the S&P is signaling that the June low is now a bottom. For the second day on Friday, the S&P 500 was trading above the 4,231 level, the 50% retracement from the top to the bottom. Chartists say that if that level is cleared and held, it usually signals the market has seen a bottom and will not return to the low. “That means we won’t make a low, but it doesn’t mean we’ll go straight up from here,” said BTIG’s Jonathan Krinsky. Pre-Calendar Monday Earnings: ThredUp, Tencent Music 8:30 a.m. Empire State Manufacturing 10:00 a.m. NAHB Survey 10:50 a.m. Fed Governor Christopher Waller 4:00 p.m. TIC Data Tuesday Earnings: Walmart, Home Depot, Agilent 8:30 a.m. Housing starts work 8:30 a.m. Construction permits 8:30 a.m. Business Leadership Survey 9:15 a.m. Industrial production Wednesday Earnings: Target, Cisco, Lowe’s, Synopsys , Tencent Holdings, Analog Devices, Performance Food Group, Krispy Kreme 8:30 a.m. Retail Sales 9:30 a.m. Fed Governor Michelle Bowman 10:00 a.m. Business Inventory 2:00 p.m. FOMC 2:20 p.m. News. Fed Governor Bowman Thursday Earnings: Applied Materials, Kohl’s, Tapestry, BJ’s Wholesale, Estee Lauder, NetEase, Ross Store 8:30 a.m. Initial statement 8:30 a.m. in Philadelphia Fed manufacturing 10: 00 a.m. Top Indicators 10:00 a.m. Existing Home Sales 1:20 p.m. Kansas City Fed President Esther George 1:45 p.m. Minneapolis Fed President Neel Kaskari Friday Earnings: Locks, Lockers, Deere 9:00 a.m. Richmond Fed President Tom Bark Trong
