1676823142 Fed Minutes PCE Inflation Walmart Earnings What You Need to

Fed Minutes, PCE Inflation, Walmart Earnings: What You Need to Know This Week

This week’s gains from retail giants Walmart (WMT) and Home Depot (HD), along with the latest update on the Federal Reserve’s preferred measure of inflation and minutes from the Fed’s last monetary policy meeting, will be the highlights of the shortened week before the holiday.

US stock and bond markets will remain closed Monday for President’s Day.

Earnings from Walmart and Home Depot, both due ahead of the market open on Tuesday, will offer further updates on the health of the U.S. consumer, who remains resilient amid stubbornly high inflation, as evidenced by January retail sales data for the last week.

MIAMI, FLORIDA - JANUARY 24: A worker stocks the shelves at a Walmart store on January 24, 2023 in Miami, Florida.  Walmart announced in early March that it would raise the minimum wage for store employees, with store employees earning between $14 and $19 an hour.  They currently make between $12 and $18 an hour.  (Photo by Joe Raedle/Getty Images)

MIAMI, FLORIDA – JANUARY 24: A worker stocks the shelves at a Walmart store on January 24, 2023 in Miami, Florida. (Photo by Joe Raedle/Getty Images)

On the economic data side, all eyes will be on the Personal Consumption Expenses (PCE) Index – the Fed’s most closely watched assessment of how fast prices are rising in the economy – due to be released Wednesday morning.

According to data from Bloomberg, January prices are likely to have risen 0.5% mom as measured by the PCE index. in December, PCE inflation rose just 0.1% m/m. On an annualized basis, PCE inflation is forecast to be 5% in January, no year-on-year improvement from the figure reported in late 2022.

Core PCE, which excludes food and energy volatile components, is expected to post a 0.4% mom increase from the previous month – up slightly from 0.3% in December – and a marginally slower 4.3% increase in the month Year-to-date, after 4.4% in the last month of 2022.

If realized, these figures would support recent evidence that inflation is not falling at the pace and extent that investors have been hoping for, even as prices have stabilized from the current cycle’s peaks.

The Consumer Price Index (CPI) released last week showed that inflation picked up in January while decelerating only slightly over the year to 6.4%. And producer prices shot up in January by the largest amount in seven months.

Federal Reserve Chairman Jerome Powell addresses attendees at a meeting of the Economic Club of Washington at the Renaissance Hotel in Washington, DC, U.S. February 7, 2023. REUTERS/Amanda Andrade-Rhoades

Federal Reserve Chair Jerome Powell addresses attendees at a meeting of the Economic Club of Washington DC, U.S., February 7, 2023. Portal/Amanda Andrade-Rhoades

This view has thwarted recent market momentum.

On Friday, the Dow Jones Industrial Average recorded its third straight week of losses for the first time since September, closing down 0.1% in the five-day trading period. T

The story goes on

The S&P 500 was down 0.3% for the week, its second straight week down, while the Nasdaq was an outlier, posting a weekly gain of 0.6%.

A bumpier-than-expected path to restoring price stability and strong economic data earlier in the year – nonfarm payrolls rose by 517,000 in January while retail sales rose 3% – have caused Wall Street banks to downgrade their expectations to be revised Reserve for upcoming rate hikes by the US federal government.

Teams from Goldman Sachs and Bank of America said this week they expect three more rate hikes this year; Before February’s rate hike, some market participants saw that the move might mark the end of the Fed’s rate-hiking cycle.

Economists at Goldman Sachs and BofA each added another 25 basis point rate hikes to their forecasts in June, bringing both banks’ forecast estimates for the federal funds rate peak this cycle to a new range of 5.25% to 5.5 % were brought.

Bank of America also noted that there are strong signs of a potential 0.50% hike at the next Federal Reserve meeting in March.

“In our view, multiple forces would need to come together to get the Fed to return to a larger 50 basis point rate hike,” a team of strategists led by Michael Gapen said in a statement on Friday.

Minutes of the Jan. 31-Jan. 2 Federal Open Market Committee (FOMC) meeting. 1 on Wednesday afternoon will offer a glimpse of the reasoning behind officials’ 25 basis point hike earlier in the month.

Cleveland Fed President Loretta Mester said in a speech Thursday that she would have preferred a 0.50% hike in interest rates, claiming that she and her colleagues still have more work to do to tame inflation.

“The FOMC has come a remarkable way in moving policy from a very accommodating to a restrictive stance, but I believe we have more work to do,” Mester said at a conference hosted by the Global Interdependence Center at Sarasota-Manatee College the University of South Florida of the business.

“I don’t want to surprise the markets,” Mester said. “We’re better at explaining that. At this meeting, there was an economic reason for it [a 50 basis point increase] from my point of view, but the market did not expect that. It influences my beliefs about what’s right for a meeting.”

On the earnings side, Walmart will start a busy week of earnings reports from Corporate America on Tuesday.

Arun Sundaram, senior equity analyst at CFRA Research, predicts that the supermarket giant will continue to benefit from inflation, particularly from higher-income customers, which is expected to boost its Walmart+ membership program.

However, the macroeconomic uncertainty poses some downside risks for the company. These potential headwinds include weaker consumer spending from lower-income consumers in the face of elevated inflation and rising interest rates, larger inventory discounts, and ongoing product, wage and transportation cost pressures.

Other notable results in the coming week will come from Home Depot, Alibaba (BABA), Keurig Dr. Pepper (KDP), Live Nation (LYV), Moderna (MRNA), PG&E (PCG) and Warner Bros. Discovery (WBD) are coming ), among others.

Troubled names like Coinbase (COIN) and Carvana (CVNA) are also set to report numbers after a junk rally that has propelled stocks higher this year.

economic calendar

Monday: Markets are closed on President’s Day. No significant reports planned for publication.

Tuesday: Philadelphia Fed Non-Manufacturing Activity IndexFebruary (-6.5% in the previous month); S&P Global US Manufacturing PMIFebruary preliminary (47.2 expected, 46.9 in previous month); S&P Global US Services PMIFebruary Prelim (47.3 expected, 46.8 in previous month); S&P Global US Composite PMIFebruary Prelim (47.5 expected, 46.8 last month); Sale of existing homesJanuary (4.10 million expected, 4.02 million last month); Sale of existing homesMoM, January (-2.0% expected, -1.5% m/m)

Wednesday: MBA Mortgage Applicationsweek ending February 17 (-7.7% in previous week); Minutes of the FOMC meetingFebruary 1st

Thursday: Chicago Fed National Activity IndexSeptember (-0.49 in the previous month); GDP annualizedquarterly, second estimate for Q4 (2.9% expected, 2.9% previously); ownconsumptionquarterly, second estimate for Q4 (2.0% expected, 2.1% previously); GDP price indexquarterly, second estimate for Q4 (3.5% expected, 3.5% previously); Core PCEquarterly, second estimate for Q4 (3.9% expected, 3.9% previously); Initial jobless claimsweek ending February 18 (220,000 expected, 194,000 last week); Ongoing Claimsweek ended February 11 (1.696 million in previous week); Manufacturing operations of the Kansas City FedFebruary (-2 expected, -1 in previous month)

Friday: Personal IncomeMoM, January (0.9% expected, 0.2% mom); Personal ExpensesMoM, January (1.3% exp., -0.2% MoM); Real personal expensesMoM, January (1.1% exp., -0.3% MoM); PCE deflatorMoM, January (0.5% expected, 0.1% mom); PCE deflatorYoY, January (5.0% expected, 5.0% mom); PCE Core Deflatormom, January (0.4% exp., 0.3% mom); PCE Core DeflatorYoY, January (4.3% expected, 4.4% mom); New Home SalesJanuary (620k expected, 616k last month); New Home Salesmom, January (0.7% expected, 2.3% mom); University of Michigan Consumer SentimentFebruary Finals (66.4 expected, 66.4 before); Kansas City Fed Services activityFebruary (-11 in previous month)

results calendar

Monday: Markets are closed on President’s Day. No significant reports planned for publication.

Tuesday: Coinbase Global (COIN), Cracker Barrel (CBRL), Home Depot (HD), Hostess Brands (TWNK), La-Z-Boy (LZB), Palo Alto Networks (PANW), Tanger Factory Outlet Centers (SKT), Toll Brothers (TOL), Walmart (WMT), ZipRecruiter (ZIP)

Wednesday: Allbirds (BIRD), Altice USA (ATUS), Baidu (BIDU), Bath & Body Works (BBWI), Bumble (BMBL), Cheesecake Factory (CAKE), eBay (EBAY), Etsy (ETSY), Fidelity National (FNF) , Lemonade (LMND), Lucid Group (LCID), Marriott Vacations (VAC), Overstock.com (OSTK), Rent-A-Center (RCII), Teladoc (TDOC), TJX (TJX), United Therapeutics (UTHR), Wingstop (WING), Wolverine World Wide (WWW)

Thursday: Alibaba Group Holding (BABA), Autodesk (ADSK), Beyond Meat (BYND), Block (SQ), Booking Holdings (BKNG), Cars.com (CARS), Carvana (CVNA), CubeSmart (CUBE), Dillard’s (DDS) , DISH Network (DISH), Domino’s Pizza (DPZ), Farfetch (FTCH), Intuit (INTU), Keurig Dr. Pepper (KDP), Live Nation (LYV), Moderna (MRNA), Nikola (NKLA), Papa John’s (PZZA), PG&E (PCG), Planet Fitness (PLNT), Steven Madden (SHOO), Warner Bros. Discovery (WBD ), Wayfair (W), YETI Holdings (YETI)

Friday: Carters (CRI), EW Scripps (SSSP)

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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