As we approach the start of the holiday-shortened week, stock futures are suggesting a slightly negative open for the major U.S. indexes. Elsewhere, most markets in Asia closed down in overnight trading, while the European indexes are mostly in negative territory. Meanwhile, oil prices are down as rising Covid-19 cases in China raise concerns about demand. West Texas Intermediate has fallen about three-quarters of a percentage point, to around $79.50 a barrel.
Traders will get to digest more readings on the state of the consumer ahead of Thanksgiving Day, with a slew of retailers all scheduled to report on Tuesday. These include Abercrombie & Fitch (ANF), Best Buy (BBY), Dick’s Sporting Goods (DKS), Dollar Tree (DLTR), and Nordstrom (JWN).
Investors had enjoyed a bear market rally recently, fueled by favorable reports on inflation. Specifically, October readings for both the Consumer Price Index and Producer Price Index came in lower than expected, sparking hopes that the Federal Reserve would be able to ease up on the monetary brakes. In particular, the central bank has increased its overnight target lending rate six times this year, with its last four meetings each yielding hikes of three-quarters of a percentage point. This has had a notably detrimental effect on the housing market and the homebuilding industry, as mortgage rates have more than doubled this year, putting a severe crimp on new and existing home sales. However, Fed officials indicated that the lead bank will continue raising rates until more evidence emerges that inflation is under control. As a result, although stocks closed on an up note Friday, equities were down for the week.
The economic calendar for this week is largely concentrated on Wednesday, which will include the Commerce Department’s reports on durable goods orders and new home sales for October, as well as the minutes from the recent Federal Open Market Committee (FOMC) meeting, among others. Otherwise, trading will likely be light this week, with many traveling ahead of the holiday. The U.S. equity markets will be closed on Thursday in observance of Thanksgiving Day and will close three hours early on Friday. Of course, Black Friday, the day when many consumers traditionally kick off their holiday shopping, will provide more data points for the Fed to sift through ahead of its next meeting, which is scheduled to wrap up on December 14th. – Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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