The U.S. stock market seems positioned for a lackluster start this morning, as investors digest the gains logged last week. Specifically, the equity market futures have been moving slightly lower in the pre-market, which could imply some downward pressure at the opening bell.
There are no major economic reports scheduled for this morning. However, tomorrow the Producer Price Index (PPI) for the month of October will be released. This report measures the change in prices of goods and services produced in the U.S., and offers a look at inflation at the wholesale level. A favorable reading here would complement the Consumer Price Index (CPI) that was so widely applauded by Wall Street last week. Clearly, investors are hoping that as inflation starts to ease, the Federal Reserve might choose to raise interest rates less aggressively, or even pause its program in the foreseeable future. On Wednesday, the Commerce Department will release the retail sales figures for the month of October. Analysts will probably want to see that the consumer is still in a position to spend, although not so aggressively as to suggest that the economy is overheated.
In corporate news, several large retailers will take the spotlight this week. Tomorrow, Walmart (WMT), one of the largest companies in the sector, will post its latest earnings report. On Wednesday, we will hear from Target (TGT) and TJX Companies (TJX). For the most part, the third-quarter earnings season has turned out to be better than many analysts had expected. However, it should be noted that while many companies have managed to meet or beat expectations, the outlooks provided on expected future prospects have been lackluster. From a technical vantage point, the stock market advanced dramatically late last week, driving the S&P 500 Index back above its 50-day moving average (located around the 3,790 mark). It was encouraging to see investors returning to the dynamic technology issues, which suggests a greater appetite for risk. However, it remains to be seen if the bulls can push stocks higher from here, or if they will need to take a breather. It is widely believed that equities perform well around the holiday season. Nonetheless, in the current environment, it is critical that the economic reports continue to show progress, or markets could move down once again. Global events, such as the hostilities between Russia and Ukraine, and China's pandemic-related policies, also add uncertainty to the mix. – Adam Rosner
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
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