A monthly report on retail sales will headline the economic docket this week as investors examine whether the economy is reaccelerating after a shockingly good September jobs report.
Corporate news will include earnings from Bank of America (BAC), Goldman Sachs (GS), and Morgan Stanley (MS), as well as reports from United Airlines (UAL) and Netflix (NFLX).
Rumor that the Federal Reserve would not lower interest rates further more at its November meeting has been mounting in previous week. The September jobs data helped allay concerns that the labor market was fast collapsing by including another drop in the unemployment rate and one of the biggest monthly payroll increase statistics of the year.
The most recent Consumer Price Index (CPI) data released on Thursday revealed core prices rising above predicted levels. With core prices rising 2.8%, contrasting to Wall Street’s projections for a 2.6% gain, Friday’s latest Producer Price Index (PPI) also delivered a similar tale.
Some have contended that given this information as well as recent minutes from the Fed’s September conference exposing “some” members would have backed a lower interest rate decrease — the central bank is probably going to keep rates constant in November.
The “no cut” debate has been inspired by stronger-than-expected economic figures. This week, investors will have another update in that area following the Thursday publication of the September retail sales report.
From the previous month, economists predict that retail sales rose 0.2% in September. Retail sales increased 0.1% in August, contradicting the drop analysts had expected.
“Retail sales, in particular, could be a significant market mover as variance in the series has increased, and scrutiny over the health of the consumer has intensified,” Jefferies’ economics team led by Thomas Simons noted to investors on Friday. “We would advise one not to read too deeply into a miss versus consensus (upside or downside) since retail sales measures expenditure with a very significant tilt towards products rather than services and it is reported in nominal terms. Weakness could simply result from ongoing deflation or disinflation in products.”
Monday
Economic data: NY Fed 1-year inflation expectations, September (3% prior)
Earnings: No notable earnings.
Tuesday:
Economic data: Empire Manufacturing, October (0.5 expected, 11.5 prior)
Earnings: Bank of America (BAC), Charles Schwab (SCHW), Citi (C), Goldman Sachs (GS), J.B. Hunt (JBHT), Johnson & Johnson (JNJ), Progressive (PGR), State Street (STT), United Airlines (UAL), UnitedHealth Group (UNH), Walgreens Boots Alliance (WBA)
Wednesday
Economic data: MBA Mortgage Applications, week ending Oct. 11 (-5.1% previously); Import price index month-over-month, September (-0.3% expected, -0.3% prior); Export price index month-over-month, September (-0.3% expected, -0.7% prior)
Earnings: Abbott (ABT), Alcoa (AA), ASML (ASML), Citizens (CIA), Discover Financial Services (DFS), Morgan Stanley (MS)
Thursday
Economic data: Initial jobless claims, week ending Oct. 12 (258,000 previously); Retail sales month-over-month, September (0.2% expected, 0.1% prior); Retail sales excluding auto and gas, September (0.3% expected, 0.2% prior); Philadelphia Fed Business Outlook, October (2.9 expected, 1.7 previously); Industrial production, month-over-month, September (0% expected, 0.8% prior); NAHB housing market index, October (42 expected, 41 prior); Leading Index, March (-0.1% expected, +0.1% previously); Existing home sales, month-over-month, March (-5.1% expected, 9.5% previously)
Earnings: Netflix (NFLX), Blackstone (BX), Travelers (TRV), First National Bank (FBAK), Western Alliance (WAL), WD-40 (WDFC)
Friday
Economic data: Housing starts month-over-month, September (-0.9% expected, 9.6% prior); Building permits month-over-month, September (-0.3% expected, 4.9% prior)
Earnings: Ally Financial (ALLY), American Express (AXP), Comerica (CMA), Procter & Gamble (PG)
Shayne Heffernan
