We are in full swing during the earnings season, with again many mixed results around earnings and guidance. This past week many names came out with decent earnings but poor guidance stating that some of the lower income brackets have slowed spending dramatically.
The overall market stayed fairly range bound last week keeping a lot of names in check with the S&P 500 ($SPX) (SPY) closing the week up over 1.50%, most of which came from the move early in the week.
This week has a few companies reporting that could give some insight into the retail space and plenty of news reports to watch.
Here are 5 things to watch this week in the Market.
Earnings
Earnings are slower this week with two bigger names reporting. Home Depot (HD) is out on Tuesday before the market opens. This has the potential to be a market mover this earnings season given how ingrained they are with both contractor and consumer renovations. If they guide down in the coming quarters and see a decrease in sales, foot traffic, or both we could see the market react poorly.
Thursday the other large name for the week reports, Walmart (WMT). Every earnings season they garner a lot of attention given how they are involved with almost every aspect of retail and that they are a low-cost retailer. If they report poorer than expected guidance we could see the market slide. Walmart is where many people go when times get tough, so if even they see a fall-off in traffic the market could read this as a very poor sign.
PPI
The first real big news release of the week is PPI out Tuesday morning. This is an important inflation number, and with CPI also due out this week it could produce some volatility. If PPI comes in hotter than expected we could see the market start to sell off. Given the importance of inflation data over the past several months, all eyes will be on this Tuesday morning.
CPI
Following PPI on Tuesday we have CPI on Wednesday. This will more than likely produce some volatility in the market. With last months CPI coming in hot, in contradiction to the FED saying that inflation is under control, if we see another hot print come in this month we could see some selling in the market. It could also completely curtail any hope of a rate cut this year.
The other thing to watch is the difference between core and regular CPI. Core excludes food and energy from the calculation so if the two do not rise in sync it could be those two factors causing the increase in inflation. And seeing as these are the two areas most people are complaining about price increases on, that could put the FED in a tough situation.
Retail Sales
Also due out Wednesday are the retail sales numbers. These numbers are the changes in total value of goods and services sold. The major difference is that the core number excludes automobiles. Given higher prices and skyrocketing debt, this will more than likely become more important in the coming months to gauge the health of the customer and indirectly the potential profits in coming quarters.
Unemployment
Unemployment claims are out Thursday morning and last week they came in hotter than expected and caused some market volatility. If we see another increase in claims it could be seen as a negative by the market and as a potential tell that the economy and consumer are not as strong as we are being told.
Best of luck this week and don’t forget to check out my daily options article.
On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
