PCE inflation results, FedEx results, and Nike lead to holidays: What to know this week

The holiday season is in full swing, but some major economic and earnings reports will be sounding in the halls on Wall Street before the markets close for the long Christmas weekend.

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

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

Earnings and the economic outlook will provide definitive 2022 clues to investors’ main focus heading into the new year: how far Fed officials will raise interest rates and whether those policy moves will tip the US economy into recession.

The Personal Consumption Expenditure Price Index – the Fed’s preferred measure of inflation due to be released on Friday – will probably be the most important data point in the coming week.

On a monthly basis, personal consumption expenditures are expected to show a rise of 0.1% in November, down slightly from 0.3% in the previous month, according to Bloomberg estimates. Personal consumption expenditures inflation may have eased to a rate of 5.5% from 6% previously during the year. Core personal consumption expenditures, which exclude the volatile food and energy components, are set to show a 0.2% increase month-on-month – unchanged from October – and a slightly slower rise of 4.7% over the year, down from 5% in the previous month.

After the Fed’s 2022 final policy announcement on Wednesday, strategists noted that the most surprising data point among the economic forecasts from policymakers was the upward revision of their core personal consumption expenditures forecast to 3.5% from 3.1% previously at the end of 2023.

“This was somewhat surprising to us because we thought the higher path of policy rate would imply a lower path of inflation, but these revisions suggest that the average member sees inflation more steady than previously thought in September,” said Michael Jabin and his team of strategists. On a recent note.

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John Fell, chief global strategist at Nikko Asset Management, also noted that this means officials believe they will need to keep rates at a high final rate through 2023, even assuming some delaying effects.

Concerns about “higher for longer” interest rates and the resulting recession hit Wall Street hard so far in December, a traditionally bullish period for the stock market that seems to be only the season.

Investors were hoping for a Santa Claus rally – a sustained rally in the stock market that takes place around the end of the year holidays. It is usually defined as covering the last five trading days of the year and the first two of the new year, regardless of which dates this year’s hopes for a rally have waned.

On Friday, US stocks confirmed consecutive weekly losses for the first time since September. Over the course of the week, the S&P 500 fell 2.1%, the Dow Jones Industrial Average 1.7%, and the Nasdaq Technology Composite 2.7%.

During the post-meeting press conference, Fed Chairman Jerome Powell emphatically emphasized that he and his colleagues are committed to bringing inflation down to 2%, the US central bank’s long-term price stability target as measured by personal consumption expenditures.

The latest reading in October came in at three times that target at 6%, with the core gauge at 5%. Meanwhile, the Consumer Price Index (CPI) rose at an annualized rate of 7.1% in November. The CPI sources data from consumers, while the sources personal consumption expenditures from businesses, each tracking a different range of expenditures. CPI, for example, only captures out-of-pocket consumptive medical expenses, while personal consumption expenditures includes employer contributions.

Housing market updates will also be closely watched in the coming week. The December Homebuilding Survey, Measurement of New Homes, Existing Home Sales, and New Home Sales are all available. Increases in the cost of shelter are a major component of steady inflation.

Elsewhere in the economic docket, the government will release its third and final estimate of gross domestic product, the broadest measure of US economic activity, which is likely to show real gross domestic product increasing at an annual rate of 2.9 percent in the third quarter of 2022 — unchanged from estimates. previous. Also due is the Conference Board’s Consumer Confidence Index, which tracks US consumer attitudes, spending plans, inflation expectations, stock prices and interest rates.

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

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Economic calendar

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

Tuesday: housing beginningsNovember (1.400 million expected, 1.425 over the previous month); Building permitsNovember (1.480M expected, 1.526M prior month, revised down to 1.512M); housing beginningson a monthly basis, November (-1.8% expected, -4.2% over the previous month); Building permitson a monthly basis, November (-2.1% expected, -2.4% over the previous month)

Wednesday: MBA Mortgage Applications, for the week ending December 16 (-3.2% over the previous week); Current Account Balance, Q3 (-expected $223.5 billion, – $251.1 billion over the previous month); Existing Home SalesNovember (4.20 million expected, 4.43 million prior month); Existing Home Saleson a monthly basis, November (-5.2% expected, -5.9% over the previous month); Consumer Confidence Conference BoardDecember (101.0 expected, 100.2 over the previous month); Conference board current statusNovember (137.4 over the previous month); Conference board forecastsNovember (75.4 over the previous month)

Thursday: Chicago Fed National Activity IndexNovember (-0.05 over the previous month); annual gross domestic productQuarterly, Q3 Estimates (2.9% expected, 2.9% prior); personal consumptionQuarterly, Q3 Estimates (1.7% expected, 1.7% prior); GDP price indexQuarterly, Q3 Estimates (4.3% expected, 4.3% prior); Basic PCEQuarterly, Q3 Estimates (4.6% expected, 4.6% prior); Unemployment claims ratesfor the week ending December 17 (222,000 expected, 211,000 over the previous week); Continuing claimsfor the week ending December 10 (expected 1.685 and 1.671 million over the previous week); leading indicatorNovember (-0.5% expected, -0.8% over the previous month); Kansas City Industrial IndexOct (expected -2, 1 over the previous week)

Friday: personal incomeon a monthly basis, November (0.3% expected, 0.7% over the previous month); personal spendingon a monthly basis, November (0.2% expected, 0.8% over the previous month); real personal spendingon a monthly basis, November (0.0% expected, 0.5% over the previous month); PCE contractionon a monthly basis, November (0.1% expected, 0.3% over the previous month); PCE contractionon an annual basis, November (5.5% expected, 6.0% over the previous month); PCE primary retractoron a monthly basis, November (0.2% expected, 0.2% over the previous month); PCE primary retractorYoY, November (4.7% expected, 5.0% prior month); Durable goods ordersNovember 1st (-1.0% expected, -1.1% yo prior); Durable goods excluding transportationearly November (0.0% expected, 0.5% over the previous month); Non-defense capital goods orders, excluding aircraftearly November (0.2% expected, 0.6% over the previous month); Non-defense capital goods shipments, excluding aircraftearly November (expected -0.2%, -1.5% over the previous month); University of Michigan Consumer ConfidenceDecember Final (59.1 predicted, 59.1 ahead); New home salesNovember (600,000 expected and 632,000 during the previous month); New home saleson a monthly basis, November (-5.1% expected, 7.5% yo prior)

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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: There are no notable reports scheduled for release.

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Alexandra Semenova is a correspondent at Yahoo Finance. Follow her on Twitter @tweet

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