May 29, 2024

4 economic reports the stock market cares about next week, including new inflation data

Wall Street ended the week lower, despite the S & P 500 notching an all-time closing high Thursday and the Nasdaq Composite hitting an intraday record Friday before dropping more than 1% in the session. The Dow Jones Industrial Average registered its worst week since October, falling 0.93%. The S & P 500 and tech-heavy Nasdaq lost 0.26% and 1.17%, respectively. Earnings season also continued to wind down on a largely positive note. According to FactSet, 99% of S & P 500 companies have reported results; 73% of companies reported an upside earnings surprise, while 64% reported better-than-expected revenue results. Within the Club, we heard this week from Foot Locker on Wednesday, then from Costco and Broadcom on Thursday. Foot Locker disappointed, though the magnitude of the sell-off in response seemed overdone. Costco and Broadcom delivered quality, but imperfect reports, opening the door for profit-takers to act following sizable runs in both stocks. The big economic data drop of the week arrived Friday with February’s nonfarm payrolls report . The jobs report certainly served to support the “soft landing” thesis, as more-than-expected job additions were offset partially by a higher-than-anticipated unemployment rate and softer annual wage inflation. That’s the right mix for investors who want to see downward pressure on inflation without a spike in unemployment that threatens economic growth. In the days leading up to the main event, we also got a private sector jobs number from payroll processing firm ADP and the February ISM Services report . Both came in slightly weaker than estimates. Meanwhile, the Commerce Department’s January factory orders report Tuesday showed a larger-than-expected drop. It is quiet on the Club earnings front in the week ahead, but several key macroeconomic updates will command the stage. The center of attention is Tuesday’s February consumer price index report . Economists are looking for a 3.1% annual increase at the headline level and 3.7% annual increase at the core level, which strips out volatile food and energy prices, according to FactSet. While the Federal Reserve’s preferred measure of inflation is the core personal consumption expenditures index, the CPI is the next best thing. It certainly factors into Wall Street’s thinking about the Fed’s next move on interest rates. Aside from the core inflation number, the key watch item within the report is the shelter index. Sticky housing inflation has been a real thorn in the Fed’s side, given it is a very large and unavoidable cost for the U.S. consumer. On Thursday, the February produce price index is due out. It doesn’t carry as much weight as the CPI report because the Fed’s primary concern are what U.S. consumers, not producers, are paying. Still, it’s an important report because it may foreshadow trends in future CPI reports. Remember, corporations have two options when it comes to rising input costs: absorb them or pass them along to customers. So, a greater-than-expected rise in the PPI may suggest price hikes in the future as companies look to protect profits by passing on those higher costs. Higher prices for consumers are exactly what we do not want to see because they will require the Fed to stay more aggressive. At the same time, as investors we also don’t love the idea of corporations denting their earnings by absorbing the costs. It’s a give-and-take situation, but in this moment the ideal outcome is easing inflation for consumers and producers alike. Economists predict the PPI in February rose 0.3% compared with the prior month, according to FactSet. Core PPI, which also excludes food and energy prices, is expected to be up 0.2% month over month. Finally, on a 12-month basis, the PPI is projected to be up 1%, per FactSet. The February retail sales report also is set to be released Thursday. Though this doesn’t provide a direct read on inflation, it does provide insight into a major part of gross domestic product and, by extension, the path the U.S. economy is on. Consumer spending accounts for roughly two-thirds of U.S. GDP, so if a soft landing – or perhaps even a “no landing” – scenario is indeed going to take place amid the Fed’s inflation fight, it’s crucial that private consumption hangs in, even as the economy slows. Understanding this helps explain why the Fed is right to be so cautious in altering monetary policy; it’s an incredible balancing act playing out in real time. Fed Chair Jerome Powell may have been late to raise rates, but fortunately he’s been putting on something of a master class in monetary policy since the U.S. central bank began to do so two years ago this month. The last big report to watch comes Friday, when we’ll get the February industrial production and capacity utilization report , which provides insight into the state of manufacturing and indirectly reflects consumer and business demand. The more end market demand, the more production and utilization we should see higher up in the supply the chain. Monday, March 11 Before the bell: Ballard Power Systems (BLDP), Fortrea Holdings (FTRE) After the bell: Oracle (ORCL), Asana (ASAN), Casey’s General Stores (CASY), Vail Resorts (MTN), Ocular Therapeutix (OCUL), Mission Produce (AVO) Tuesday, March 12 8:30 a.m. ET: Consumer Price Index Before the bell: Archer-Daniels-Midland (ADM), On Holding (ONON), Kohl’s Corporation (KSS), Workhorse Group (WKHS), Kanzhun Limited (BZ), Hagerty (HGTY), International Game Technology (IGT), Manchester United (MANU), Blade Air Mobility (BLDE) After the bell: Clover Health (CLOV), Beauty Health Company (SKIN), Allbirds (BIRD), Phunware (PHUN), Energy Vault Holdings (NRGV), PHX Minerals (PHX), Guild Holdings Company (GHLD), 360 Finance (QFIN), Heron Therapeutics (HRTX), Purple Innovation (PRPL) Wednesday, March 13 Before the bell: Dollar Tree (DLTR), ZIM Integrated Shipping Services (ZIM), Arcos Dorados Holdings (ARCO), Petco Health and Wellness Company (WOOF), Village Farms International (VFF), Williams-Sonoma (WSM) After the bell: UiPath (PATH), SentinelOne (S), ESS Tech (GWH), Lennar (LEN), Vroom (VRM) Thursday, March 14 8:30 a.m. ET: Producer Price Index 8:30 a.m. ET: Initial Jobless Claims 10:00 a.m. ET: Retail Sales Before the bell: Dollar General (DG), DICK’S Sporting, Inc. (DKS), Futu Holdings (FUTU), Canadian Solar (CSIQ), Build-A-Bear Workshop (BBW), Autolus Therapeutics (AUTL), G-III Apparel Group (GIII), Solo Brands (DTC), GoHealth (GOCO), Weibo Corporation (WB) After the bell: Adobe (ADBE), Blink Charging (BLNK), ULTA Beauty (ULTA), PagerDuty (PD), Smartsheet (SMAR)The major averages all closed lower for the week despite the S & P 500 notching a new all-time closing high Thursday and the Nasdaq hitting a new intraday all-time high on Friday Friday, March 15 9:15 a.m. ET: Industrial Production & Capacity Utilization Before the bell: Jabil Inc. (JBL), Embraer (ERJ) (Jim Cramer’s Charitable Trust is long FL, COST and AVGO. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

A view of grocery store in Washington DC, United States on February 14, 2024.

Mostafa Bassim | Anadolu | Getty Images

4 economic reports the stock market cares about next week, including new inflation data

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