What To Expect in the Markets This Week

Key Takeaways

The Friday release of Personal Consumption Expenditures (PCE) for November will show whether inflation is continuing to trend lower.Data on homebuilder confidence, housing starts, building permits, existing home sales, and new home sales will shine light on the strength of the housing market.The final 2023 Michigan Consumer Sentiment Index, for December, will be released.Nike Inc., Accenture PLC, FedEx Corp., Micron Technology Inc., and CarMax Inc. report earnings this week.

Stock markets, which have gained ground for seven consecutive weeks, are open this week on a normal operating schedule ahead of the coming two holiday-shortened weeks. Market watchers will be focused on Friday’s Personal Consumption Expenditures (PCE) index to gauge if inflation is continuing its downward trend.

The latest trends in the housing market will come into view as several indicators are released this week, including homebuilder confidence, housing starts, building permits, existing home sales, and new home sales. The final Michigan Consumer Sentiment Index for this year covering December will show how Americans are feeling about the economy.

Several companies will report earnings this week, including Nike Inc., Accenture PLC, FedEx Corp., Micron Technology Inc., and CarMax Inc. 

Monday, Dec. 18

Heico Corp. (HEI) reports earnings
Homebuilder confidence index (December)

Tuesday, Dec. 19

Accenture (ACN) and FedEx (FDX) report earnings
Housing starts (November)
Building permits (November)

Wednesday, Dec. 20

Micron Technology (MU) and General Mills Inc. (GIS) report earnings
U.S. current account (Third quarter)
Existing home sales (November)

Thursday, Dec. 21

Nike (NKE), Cintas Corp. (CTAS), Paychex Inc. (PAYX), CarMax (KMX), and Carnival Corp. (CCL) report earnings
Initial jobless claims (Week of Dec. 16)
Gross domestic product revision (Third quarter)
Philadelphia Fed manufacturing survey (December)
U.S. leading economic indicators (November)

Friday, Dec. 22

Personal Consumption Expenditures (PCE) index (November)Durable goods orders (November)S&P flash U.S. services Purchasing Managers Index (PMI) (December)S&P flash U.S. manufacturing PMI (December)New home sales (November)Consumer sentiment – final (December)

PCE Reading Will Show Fed If Inflation Is Still Falling

The Federal Reserve appears to be signaling that it is finished for the moment with its rate hike campaign. Now, it’s time to see if prices will cooperate, as the December Personal Consumption Expenditures (PCE) index on Friday will show if inflation is continuing its downward trend. 

After the Fed indicated that it could cut interest rates by 75 basis points in 2024 as it attempts to guide the economy into a soft landing, officials will want to see continued progress on prices. Recent readings on inflation have been positive, with the Consumer Price Index (CPI) declining to 3.1% in November

The Fed’s preferred reading on inflation, the PCE, fell to its lowest levels since March 2021 for October when it dropped to 3%, but it’s still over the target inflation level of 2%. Another drop in the PCE could give Fed officials confidence about being on a path to enact those rate cuts. 

Retail Rolls Into Big Week Ahead of Christmas Holiday

In the last full week before the Christmas holiday season, retailers look to be busy, as the latest report from the U.S. Census Bureau showed retail sales rose 0.3% in November from October, shooting past expectations that sales would decline. 

Forecasts for the holiday shopping season have been mixed, as retailers like Walmart Inc., Target Corp. and Best Buy Co. have warned that sales may weaken for the quarter, though some analysts see holiday spending rising.

Retail outlets have their opportunity to beat those projections this week, which features two of the busiest shopping days of the year, according to retail analysts Sensormatic Solutions. Known as “Super Saturday,” Dec. 23 is forecast as the second-busiest shopping day of the year, behind only Black Friday after Thanksgiving. Friday, Dec. 22 is forecast to be the fourth-busiest shopping day this year.

Market watchers will also get a viewpoint on retail when Nike reports fiscal second-quarter earnings on Thursday, after the shoe maker posted better-than-expected profit, while slashing its inventory, for the prior quarter.

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