With reports from Walmart and other major retailers, inflation remains a hot topic in the coming week

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Traders work on the trading floor of the New York Stock Exchange (NYSE) in New York City, USA on October 13, 2021.

Bren Dank Demead | Reuters

With the upcoming release of October retail sales data and major chain store revenues, consumers will become the focus in the coming week.

Retail sales are an important economic report this week, and the Census Bureau will release October data on Tuesday.

Peter Boockvar, chief investment officer of Bleakley Consulting Group, said he was also reviewing Monday’s New York Federal Reserve’s Empire State Manufacturing Survey for an update on prices paid. The Philadelphia Federal Reserve Manufacturing Survey, which measures economic growth in the region, was released on Thursday.

“This will be the key. Besides, it’s retail sales,” Bukova said. “I think inflation stories will continue to dominate headlines and market news and the actions of the Federal Reserve.”

Investors will also pay attention to the results of a virtual meeting between President Biden and Chinese President Xi Jinping on Monday night.

“I think they are good based on the conversation,” Bukova said. “Unless there is a shocking change in the tariff situation, I don’t think there will be any results, but I suspect that anything will happen.”

Chain store revenue

The earnings season is coming to an end, but large stores have not yet reported. Wal-Mart and Home Depot announced their results on Tuesday, and Target announced their results on Wednesday.

Art Hogan, chief market strategist at National Securities, said: “Walmart is undoubtedly a considerable barometer of consumer health, and it will be interesting to see how they handle profit margins.” Rising costs bring companies from all walks of life. When the pressure came, many companies responded by raising their prices.

According to the latest sentiment data on Friday, consumers are clearly worried about price increases. The University of Michigan Consumer Confidence Index fell from 71.7 in October to a 10-year low of 66.8 in the preliminary report in November.

“It is very important to observe consumer behavior compared to what they say,” Hogan said. He said that retail sales are expected to increase by 1.1%, compared with an increase of 0.7% in September.

“The trend we are looking for next week is continuous improvement in economic data,” Hogan said. “This is an important thing to focus on.”

Other data for next week include industrial production on Tuesday. New housing starts and building permit data will be released on Wednesday.

In the past week, after both producer prices and consumer prices were higher than expected, inflation has also proven to be a problem for the stock market. The consumer price index rose by 6.2%, a three-year high.

The stock market has ended five consecutive weeks of gains, and all major indexes have fallen in the past week. The Standard & Poor’s 500 Index fell 0.3% this week to 4,682 points. The Nasdaq Index and Russell 2000 Index fell the most, down 0.7% and 1%, respectively.

Treasury bond yields have risen as investors bet that the Fed may be forced to raise interest rates early to combat inflation.

On Friday afternoon, the 10-year Treasury bond yield was 1.57% and the 2-year Treasury bond yield was 0.52%. The rate of return is the opposite of the price.

The main S&P stock sector with the best performance was the materials sector, which rose more than 2.5%. The worst performer was in the consumer discretionary sector, which includes retailers: it fell nearly 3.2%.

Hogan said that even with inflation concerns, he expects the stock market to continue to rise.

“I think we continue to move higher. We performed the bigger reset we needed, which is six weeks-two weeks in September and October,” he said. “The good news is that demand has not been destroyed. It has been delayed.” Hogan said the supply chain problem should be resolved. He pointed out that certain components of the CPI, such as higher used car prices, indicate that inflation should be temporary.

Adam Parker, founder of Trivariate Research, said he expects the market to continue to rise. He said: “What makes me call for the market to correct will be two things-arrogance and debt.” These are not problems at the moment, because he has not seen signs of “management problems” and many companies have restructured their debts.

He said management did not adopt the arrogant behavior that is more common at the top of the market, such as overspending.

Parker said he expects earnings to achieve mid-single-digit growth. “I think we may be very constructive in the next few quarters,” he said.

One week in advance calendar

on Monday

income: Advance Auto Parts, Tyson Foods, Warner Music, WeWork, Axon, Casper Sleep, Rackspace, Oatly, Lucid

8:30 a.m. Made in Empire

Tuesday

income: Walmart, Home Depot, La-Z-Boy, Vodafone, Emma, ​​NetEase, TransDigm

8:30 AM Retail

8:30 am Import price

9:15 am Industrial production

10:00 AM NAHB investigation

12:00 pm Richmond Fed Chairman Thomas Barkin, Atlanta Fed Chairman Raphael Bostic, Kansas City Fed Chairman Esther George, Minneapolis Fed Chairman Neel Kashkari

4:00 p.m. TIC data

Wednesday

income: NVIDIA, Target, Cisco Systems, Baidu, Lowe’s, Copa Holdings, Bath & Body Works, Victoria’s Secret, Sonos

8:30 AM Housing starts

8:30 am Building permit

4:05 PM Charles Evans, Chairman of the Chicago Federal Reserve Bank

Thursday

income: Alibaba, Applied Materials, Macy’s, Cole Department Store, BJ’s Wholesale, Ross Stores, Intuit, Palo Alto Networks, Nuance Communications, JD.com, Vipshop, Workday, Williams-Sonoma

8:30 am Unemployment benefits

8:30 am Philadelphia Federal Reserve Manufacturing

10:00 AM Leading Indicators

2:00 p.m. Evans of the Chicago Fed

Friday

income: Locker with buckle

10:45 AM Fed Governor Christopher Waller

12:15 pm Richard Clarida, Vice Chairman of the Federal Reserve


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