PCE Inflation, FedEx, Nike Earnings Lead to Holidays: What to Know This Week

The holiday season is upon us, but a few key earnings and economic reports will grace the halls of Wall Street before markets close for a long Christmas weekend.

In the coming days, the economic calendar will bring investors the latest Personal Consumption Expenditures Price Index – or PCE – which is the Fed’s preferred measure of inflation, as well as another reading on GDP, a lot housing data and the Conference Board’s gauge of consumer confidence.

On the corporate side, earnings from Nike (NKE), FedEx (FDX), Micron Technology (MU), Carnival (CCL) will keep traders busy.

People walk past holiday decorations at the New York Stock Exchange (NYSE) in New York, U.S., December 14, 2022. REUTERS/Andrew Kelly

Earnings and economic programming will offer the latest clues for 2022 on investors’ primary focus heading into the new year: how much Federal Reserve officials will raise interest rates and whether those policy moves will tip the scales. the US economy in a recession.

The PCE price index – the Fed’s preferred inflation gauge due out on Friday – is perhaps the most crucial data point for the week ahead.

On a monthly basis, the PCE is expected to post a 0.1% gain in November, down slightly from 0.3% the previous month, according to Bloomberg consensus estimates. PCE inflation likely declined to a rate of 5.5% vs. 6% prior to the year. Core PCE, excluding volatile food and energy components, is expected to post a 0.2% rise from the prior month – unchanged from October – and a slightly slower rise of 4.7% on the month. year, compared to 5% the previous month.

Following the Fed’s final policy announcement for 2022 on Wednesday, strategists pointed out that the most surprising data point among policymakers’ economic projections was an upward revision to their core PCE expectations at 3 .5%, compared to 3.1% previously at the end of 2023.

“This surprised us somewhat as we thought a higher path for the policy rate would mean a lower path for inflation, but these revisions suggest that the median member sees inflation as significantly more rigid than it previously thought so in September,” Bank of America said. Michael Gapen and his team of strategists said in a recent note.

Nikko Asset Management’s chief global strategist, John Vail, also pointed out that this means officials believe they will have to keep rates at a high terminal rate through 2023, even assuming some lag effects.

Worries about “higher for longer” rates and the resulting economic slowdown have weighed heavily on Wall Street so far in December, a traditionally bullish period for the stock market that appears to be anything but this season.

Investors were hoping for a Santa Claus rally – a sustained rise in the stock market that occurs around the holiday season. Generally defined as covering the last five trading days of the year and the first two of the new year, regardless of dates, hopes for a recovery this year have been dampened.

On Friday, US stocks confirmed back-to-back weekly losses for the first time since September. For the week, the S&P 500 lost 2.1%, the Dow Jones Industrial Average 1.7% and the tech-heavy Nasdaq Composite 2.7%.

In the press conference following the meeting, Fed Chairman Jerome Powell made a strong statement that he and his colleagues were committed to bringing inflation down to 2%, the long-term price stability target. US central bank term, measured by the PCE.

The latest reading in October hit three times that target at 6%, with the base measure at 5%. Meanwhile, the consumer price index (CPI) rose at an annual rate of 7.1% in November. The CPI index provides data to consumers, while the PCE comes from companies, each following a different scope of expenditure. The CPI, for example, only captures consumer medical costs, while the PCE includes employer contributions.

Housing market updates will also be closely watched over the coming week. The December homebuilder survey and measurement of housing starts, existing home sales and new home sales are all underway. Housing cost increases are a key driver of persistent inflation.

Federal Reserve Board Chairman Jerome Powell speaks during a press conference following a meeting of the Federal Open Market Committee at the Federal Reserve Board Building in Washington, DC on December 14, 2022. - The Federal Reserve has moderated his all-out campaign to calm U.S. inflation on Wednesday, raising the benchmark lending rate by half a percentage point as his political actions ripple through the economy.  (Photo by Nicholas Kamm/AFP) (Photo by NICHOLAS KAMM/AFP via Getty Images)

Federal Reserve Chairman Jerome Powell speaks during a press conference in Washington, DC on December 14, 2022. (Photo by NICHOLAS KAMM/AFP via Getty Images)

Elsewhere on the economic record, the government will release its third and final estimate of GDP, the broadest measure of US economic activity, which is expected to show real gross domestic product grew at an annual rate of 2.9% in third quarter of 2022 – unchanged from previous estimates. The Conference Board’s Consumer Confidence Index, which tracks U.S. consumer attitudes, spending plans and expectations for inflation, stock prices and interest rates, is also to be released.

On the corporate side, earnings from FedEx and Nike will be critical indicators of consumer spending during the all-important holiday shopping season, while results from Micron will provide the latest insight into the chip industry.

Economic Calendar

Monday: NAHB Housing Market IndexDecember (34 expected, 33 in previous month)

Tuesday: Housing startsNovember (1.400 million expected, 1.425 in previous month); Building permitNovember (1.480 million expected, 1.526 million in previous month, revised down to 1.512 million); Housing startsmonth-over-month, November (-1.8% expected, -4.2% in prior month); Building permitmonth-over-month, November (-2.1% expected, -2.4% in prior month)

Wednesday: MBA Mortgage Applications, week ended December 16 (-3.2% over the previous week); Current account balance, Q3 (-$223.5 billion expected, -$251.1 billion in prior month); Sales of existing housesNovember (4.20 million expected, 4.43 million in the previous month); Sales of existing housesmonth-over-month, November (-5.2% expected, -5.9% in prior month); Conference Board Consumer ConfidenceDecember (101.0 expected, 100.2 in previous month); Current status of the Conference BoardNovember (137.4 in the previous month); Conference Board ExpectationsNovember (75.4 in previous month)

Thursday: Chicago Fed National Activity IndexNovember (-0.05 over the previous month); Annualized GDPquarter-on-quarter, third estimate of third quarter (2.9% expected, 2.9% before); Personal consumptionquarter-on-quarter, third estimate of third quarter (1.7% expected, 1.7% before); GDP price indexquarter to quarter, third estimate of the third quarter (4.3% expected, 4.3% before); Basic PCEquarter-over-quarter, third estimate of the third quarter (4.6% expected, 4.6% before); Initial jobless claimsweek ended December 17 (222,000 expected, 211,000 the previous week); Continuing claimsweek ended Dec. 10 (1.685 forecast, 1.671 million in previous week); Main indexNovember (-0.5% expected, -0.8% in previous month); Kansas City Manufacturing IndexOctober (-2 expected, 1 the previous week)

Friday: Personal incomemonth-over-month, November (0.3% expected, 0.7% prior month); Personal expensesmonth-over-month, November (0.2% expected, 0.8% prior month); Actual personal expensesmonth-over-month, November (0.0% expected, 0.5% in prior month); PCE deflatormonth-over-month, November (expected 0.1%, 0.3% prior month); PCE deflatorYear-over-Year November (5.5% expected, 6.0% in prior month); Basic PCE deflatormonth-over-month, November (0.2% expected, 0.2% in prior month); Basic PCE deflatorYear-over-Year November (4.7% expected, 5.0% in prior month); Durable Goods OrdersNovember Preliminary (-1.0% expected, 1.1% in prior month); Durable goods excluding transportNovember preliminary (0.0% expected, 0.5% in previous month); Orders for non-defence capital goods excluding aircraftNovember preliminary (0.2% expected, 0.6% in previous month); Shipments of non-military capital goods excluding aircraftNovember preliminary (-0.2% expected, 1.5% in previous month); University of Michigan Consumer SentimentDecember finale (59.1 expected, 59.1 before); Sales of new homesNovember (600,000 expected, 632,000 in previous month); Sales of new homesmonth-over-month, November (-5.1% expected, 7.5% in prior month)

Earnings Calendar

Monday: Heico (HEI), Steelcase (SCS)

Tuesday: Nike (NKE), General Mills (GIS), FedEx (FDX), FactSet (FDS), CalAmp Corp. (CAMP), BlackBerry (BB), FuelCell Energy (FCEL), Neogen (NEOG), Worthington Industries (WOR)

Wednesday: Micron Technology (MU), Cintas (CTAS), MillerKnoll (MLKN), Rite Aid (RAD), Toro (TTC), Carnival Cruises (CCL)

Thursday: CarMax (KMX), Apogee Enterprises (APOG), Paychex (PAYX)

Friday: No notable reports scheduled for publication.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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