What to know this week

Aditya Bhave, a U.S. economist with Bank of America, wrote in a note to clients that Powell will likely hint at a “slower” cut in January, including a pause in the rate-cutting cycle, in his news conference.

Ahead of the Fed’s decision on Wednesday, officials will get a new read on the consumer situation with the November retail sales report. Economists estimate that retail sales rose 0.5% in October compared to the previous month. The control group, which consists of retail sales that exclude several variable categories such as gasoline and go directly into gross domestic product (GDP), is also expected to increase by 0.4%.

Bank of America’s US economics team thinks this report will reflect a strong start to the holiday shopping season.

“Online retail spending was particularly strong during the Thanksgiving period,” the team wrote in a note to clients on Friday. “In fact, holiday spending remains above cumulative 2023 levels despite a delayed Thanksgiving. Therefore, we expect a strong retail sales report for November, with ex-auto retail sales and the core check category coming in at 0.5% for the month.”

Readings of both last week Consumer Price Index (CPI) and producer price index (PPI) showed signs of inflation making little progress towards inflation Fed’s 2 percent target. But many economists suggested there were hopeful signs in the details of those reports that would lead to a less ominous reading of the Fed’s preferred inflation gauge next Friday.

Economists expect the annual “core” PCE, which excludes volatile categories such as food and energy, to rise to 2.9% in November from 2.8% in October. But economists last month predicted the “core” PCE would be 0.2%, below the 0.3% increase seen in October.

“In our view, the November data on inflation should provide comfort that the disinflation process is continuing,” Morgan Stanley chief U.S. economist Michael Gapen said in a note to clients on Friday. he said. “Although the headline and core CPI came in slightly above our expectations… we found the details of the report positive in terms of considering that inflation will continue to decline in the near term.”

For 10 consecutive trading days, stocks in the S&P 500 have fallen more than they have risen; This was the longest period since September 2001. Still, during this period, which includes December, the S&P 500 increased by approximately 0.3%. Meanwhile, the equally weighted version of the S&P 500 (^SPXEW), which was not much affected by movements in the index’s major stocks, fell more than 3%.

“Savvy traders should at least pay attention to some warning signs about the overall health of the market. So far it’s either on the nose or just a bad case of breadth,” Steve Sosnick, chief strategist at Interactive Brokers, wrote in a note to clients. on Thursday. “But there are some symptoms that, if left unattended, could lead to something more significant.”

For now, the rise in the market’s biggest technology stocks is keeping the benchmark index afloat, according to Sosnick. Nasdaq Composite on Wednesday It closed above 20,000 for the first time As alphabet (GOOG, Google), Tesla’s (TSLA), Meta (META) and Amazon (AMZN) all rose to record levels

Charles Schwab senior investment strategist Kevin Gordon told Yahoo Finance that this market move happened as investors took action. digesting sticky inflation pressures, and the possibility that the Fed will lower interest rates less than initially, but is not a “surprise” next year.

“If interest rates are going to stay a little bit higher for a little bit longer than expected, then companies that are a net benefit from higher rates would probably do well in that scenario,” Gordon said.“The Magnificent Seven” stocks fit this description.

Economic data: Empire manufacturing activity, December (expected 5.8, previous 31.2); S&P Global US manufacturing PMI, preliminary December (previous 49.7); S&P Global US services PMI, December preliminary (previous 56.1); S&P Global US composite PMI, preliminary December (prev 54.9)

Earning: There is no significant gain.

Economic data: Retail sales compared to the previous month, November (+0.5% expected, +0.4% ahead) Retail sales, excluding autos and gas, compared to the previous month, November (+0.5% expected, +0.1% ahead) ; Retail sales control group, on a monthly basis, November (expected +0.4%, previous -0.1%); Industrial production, on a monthly basis, November (expected 0.2%, previous -0.3%); NAHB housing market index, December (46 expected, 46 previously)

Earning: There is no significant gain.

Economic data: Construction permits on a monthly basis, preliminary November (1% expected, previous -0.4%); Housing starts month over month, November (expected 2.5%, previously -3.1%); FOMC rate decision (expected 4.25% to 4.5%, previously 4.5% to 4.75%)

Earning: Birkenstock (Birk), General Mills (GIS), Lennar (LENGTH), Micron (INSIDE)

Economic data: Annualized GDP, quarter-over-quarter, third quarter third estimate (2.8% expected, 2.8% prior); Core PCE quarter-over-quarter, third-quarter third estimate (previous 2.1%); Philadelphia jobs outlook, December (expected 2.2, previously -5.5); Initial jobless claims, week ending December 14 (242,000 expected); Leading index, November (-0.1% expected, previous -0.4%); Existing home sales compared to the previous month, November (expected 3.3%, previously 3.4%)

Earning: Accenture (ACN), BlackBerry (B.B.), CarMax (KMX), Konagra (AGE), Darden Restaurants (DRI), Information Set (FDS), FedEx (FDX), Lamb Weston (L.W.), Nike (RELATED TO)

Friday

Economic data: Personal income, November (+0.4% expected, +0.6% ex); Personal spending, November (+0.5% expected, +0.4% before); PCE index on a monthly basis, November (expected +0.2%, previous +0.2%); PCE Index on an annual basis, November (expected +2.5%, previous +2.3%); Core PCE Index on a monthly basis, November (+0.2% expected, +0.3% previously); Core PCE Index, on an annual basis, November (+2.9% expected, +2.8% previously); University of Michigan consumer sentiment index, December final (74 previous); Kansas City Fed servicing activity, December (before 9)

Earning: Carnival Company (CCL), at Winnebago (WHO)

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

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