The U.S. stock market is poised to move higher this morning, as a new week on Wall Street commences. Over the next few days, investors will receive some important inflation data, as well as another batch of corporate profit reports. As we were writing this update, the S&P 500 Index futures were ahead roughly 13 points (0.25%) in early morning trading.
There are no major economic reports scheduled for today. However, tomorrow the July PPI (Producer Price Index) will be published, followed by the CPI (Consumer Price Index) on Wednesday. Investors will be looking to these releases for confirmation that inflation is easing, and that the Federal Reserve will most likely adopt a more-accommodative policy. On Thursday, the U.S. retail sales numbers for July will be the central area of focus. Retail sales were flat in June, and investors will likely want to see some improvement in this area. A healthy retail sales report should reassure investors that the consumer is still engaged, and that the economy is not headed for a slowdown.
In corporate news, most of the large companies in the S&P 500 Index have already reported their second-quarter results. However, there are still a number of important reports being published. This week, we will hear from a handful of leading retail companies, including Home Depot (HD) and Walmart (WMT). In the technology sector, Applied Materials (AMAT) and Cisco Systems (CSCO) will weigh in with their numbers.
Technically, the stock market sold off dramatically in early August. The pullback pushed the S&P 500 Index below its 50-day moving average (located at the 5,445 mark), which is an area that is closely watched by followers of technical analysis. Stocks have managed to firm somewhat over the past few days, which is a constructive development. However, it remains to be seen if the market can quickly regain its stride, or if a longer period of consolidation might be needed. In addition, it is not apparent which equity sectors will provide market leadership going forward. Several weeks ago, traders started to rotate capital out of the popular technology sector and into equity groups that had been previously out of favor. As the market recovers, it will be interesting to see if the large cap technology issues will reassert market dominance, or if capital will flow elsewhere. – 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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