The U.S. stock market seems poised for a positive start this morning. Overnight, the international markets delivered a constructive session, and on our shores, the S&P futures are ahead slightly. Sentiment has improved over the past few sessions, however it should be noted that stocks have been quite choppy lately, and the environment remains challenging.
In economic news, investors have a number of important items to review this week. This morning, the National Association of Realtors will release its pending home sales report for the month of May. Investors will likely be watching this release, since that the broader real estate sector plays an important role in the larger economy. Tomorrow, the consumer confidence numbers for the month of June will be published. Based on the recent pattern, consumers probably remain cautious, reflecting ongoing concerns about the economy and escalating prices for many essential items. On Thursday, the latest monthly Personal Consumption Expenditures Price (PCE) Index will be issued. This report measures changes in consumer expenses and behavior, and is widely followed by the Federal Reserve. The central bank has been in the spotlight lately, as it has been hiking interest rates and shaping monetary policy to curb inflation. However, many on Wall Street are concerned that aggressive measures could throw the economy into a recession.
In the corporate arena, there will be a few notable profit announcements this week. Today, after the market closes, we will hear from NIKE (NKE), a leading manufacturer of athletic footwear and apparel. Later in the week, we will receive a report from General Mills (GIS), a major producer of packaged food items. Paychex (PAYX), a leading business software company, will weigh in with its numbers. Looking ahead, the second quarter is quickly drawing to a close, and Wall Street will be watching the results carefully. Given the challenging economy and mounting inflationary pressures many traders will want to see that corporations are still faring well. If too many companies lower guidance, it could impact equity valuations.
From a technical perspective, the markets started to act better late last week. However, it remains to be seen if those gains can be extended further. Unfortunately, during bear markets small rallies can materialize, only to fizzle out later.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
