#WallStreet #ConsumerData #Inflation #FederalReserve #EconomicOutlook #Hawkish #RetailSales #BidenXi
Wall Street is preparing for a week of important data releases and potential geopolitical risks as investors aim to sustain the November rally until the end of the year. The stock market has seen consecutive weekly gains, with the S&P 500 up 5.28% so far this month. The focus now shifts to the key inflation release from the Commerce Department on Tuesday, which will provide insight into the pace of price pressures and potentially impact the Federal Reserve’s decision on interest rates.
Economists are anticipating a slowdown in headline inflation to 3.3% for the last month, compared to the 3.7% recorded in September and the peak of 9.1% in June of last year. However, core consumer prices, which are closely monitored by the Fed, are expected to remain steady at 4.1% on a yearly basis and 0.3% on a monthly basis. This can be attributed to a strong economy and a resilient labor market. The mixed readings may not be enough to prompt the Fed to change its hawkish rate stance, as indicated by Chairman Jerome Powell. As a result, Treasury bond yields may rise. The market currently indicates a 26% chance of a rate hike by June, but some economists believe that the Fed may still have room for a final rate hike. Inflation is expected to face some setbacks on the path to reaching the Fed’s target of 2%.
In addition to the inflation release, the market will also closely monitor the retail sales figures for October, which will be released by the Commerce Department on Wednesday. The headline figure, which is not adjusted for inflation, is expected to show a 0.1% decline from September, mainly due to lower gas prices. The holiday season outlooks from major retailers, including Home Depot, Target, and Walmart, will also provide important insights into consumer spending trends. Walmart is expected to report a 1.3% increase in earnings and a 4.4% increase in revenues. Overall, the third-quarter earnings season is coming to a close with stronger-than-expected results. Around 81.3% of reporting companies have beaten Wall Street forecasts, and collective profits for the S&P 500 are forecasted to rise 6.3% from last year. However, earnings growth is expected to slow down in the coming months. Finally, investors will keep a close eye on the meeting between President Biden and President Xi Jinping at the Asia-Pacific Economic Cooperation summit, where regional security issues, economic relations, and global challenges will be discussed.
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