NEW YORK - The S&P 500 index showed resilience Monday, maintaining its level after a shaky start to the trading day. This stability comes on the heels of ending a three-month downtrend last week. Investors are now looking ahead to a busy week of economic data and corporate earnings that may offer further clues about the health of the U.S. economy and consumer behavior.
Key economic indicators are set to be released throughout the week, with U.S. Consumer Price Index (CPI) figures for October anticipated on Tuesday. The data is expected to reveal signs of receding inflation, which could influence market sentiment and monetary policy decisions. Following CPI, Wednesday will bring the Producer Price Index (PPI) and U.S. Retail Sales data, with retail sales projected to show a slight decline of 0.1% month-over-month.
The earnings season continues with major retailers reporting their quarterly results this week. The Home Depot (NYSE:HD) is slated to announce its earnings on Tuesday, with an expected GAAP Earnings Per Share (EPS) of $3.76 on $37.6 billion in sales, potentially reflecting the impact of reduced COVID-era savings among middle-income customers.
Wednesday will see reports from Target (NYSE:TGT) and Walmart (NYSE:WMT), with both retailers predicted to post lower earnings compared to last year's figures. Meanwhile, Chinese e-commerce giant JD (NASDAQ:JD).com is expected to report an adjusted EPS of $0.81 on nearly $34 billion in sales.
Walmart's report on Thursday is projected to buck the trend with an anticipated rise in GAAP EPS to $1.51 on $158.5 billion in sales. Other reports include Alibaba (NYSE:BABA), which is expected to show year-over-year growth but a pullback from recent quarters, and XPeng (NYSE:XPEV), which is projected to report a loss of $-0.46 in adjusted EPS on $1.18 billion in sales.
Friday's focus will shift to housing market data, with U.S. Housing Starts and Building Permits figures for October forecasted to show a monthly decline.
Investors are also keeping a close watch on political developments in Washington D.C., as the potential federal government shutdown looms due to a failed spending bill. The U.S. House of Representatives is preparing to vote on a continuing resolution in an effort to address the impasse.
In market analysis, strategist Albert Edwards has raised concerns about companies with weak balance sheets, cautioning about a looming "corporate zombie iceberg." Despite these warnings, the S&P 500's recent performance has been positive, achieving its bull target with closing at 4,415 last Friday and now setting its sights on the September 1 high at 4,541. Technical indicators such as the 9-day Simple Moving Average (SMA) crossing above the 21-day SMA near 4,280 suggest there may be more room for a rally.
With Core CPI figures for October expected to remain unchanged, investors will continue to gauge inflation trends and their implications for future interest rate hikes and economic growth prospects. The week ahead promises to be critical for markets as they digest a confluence of economic data points and corporate financial health updates.
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