The S&P 500 (^GSPC) closed above 5,000 for the first time ever on Friday as the three major averages logged a positive week for the 13th time in the last 14 weeks.
With few economic catalysts in the past week, investors have been digesting a slew of corporate results that have come in better than expected. Meanwhile, commentary from Federal Reserve officials largely reiterated the central bank's stance that more confidence in inflation's path downward is needed.
The week will bring new challenges to the market rally, though, with a fresh reading on inflation and consumer spending highlighting the economic calendar. On the corporate side, about 15% of the S&P 500 is set to report earnings headlined by John Deere (DE), Coinbase (COIN), Airbnb (ABNB), and Shopify (SHOP).
Price check
Tuesday morning will bring investors the Consumer Price Index (CPI) for January. Wall Street expects an annual gain of 2.9% for headline CPI, which includes the price of food and energy, a noted decrease from the 3.4% headline number in December. Prices are set to rise 0.2% on a month-over-month basis, in line with December's rise.
On a "core" basis, which strips out the food and energy prices, inflation is expected to have risen 3.7% year over year, a slowdown from the 3.9% increase seen in December. Monthly core price increases are expected to clock in at 0.3%, unchanged from the month prior.
"We expect more core goods deflation this month, mainly driven by weak used car prices," Morgan Stanley economist Diego Anzoategui wrote in a note to clients on Thursday. "Gradual deceleration is confirmed, but services inflation remains sticky with some deceleration in rents inflation but a slight rebound in insurance prices and hotels."
State of the consumer
Part of the soft-landing thesis that's taken over markets in the past few months has been consistent stronger-than-expected data on consumer spending. A fresh reading on that trend is set to greet investors on Thursday with the January retail sales report. Economists expect that retail sales declined 0.2% in January from the prior month.
Bank of America US economist Michael Gapen is anticipating a "soft" print due to seasonal factors and widespread winter storms that likely disrupted retail spending in January. But Gapen doesn't believe this changes the overall narrative for the consumer.
"Sifting out the noise, however, the consumer looks healthy, with upside risks to spending from accelerating real wages," Gapen wrote in a note to clients.
The real wages metric Gapen references, which is the wage Americans see after subtracting headline inflation from their wage growth, was recently listed in the Yahoo Finance Chartbook as a reason the US economy has skirted recession amid higher interest rates.
A final look at traditional autos
After Tesla's (TSLA) earnings report disappointed investors, traditional automakers Ford (F) and GM (GM) surprised to the upside. Stellantis (STLA), the parent company of Chrysler and Fiat, is on deck to report Thursday, making it the last Big Three automaker to report earnings this cycle.
Yahoo Finance's Pras Subramanian reports: While the United Auto Workers (UAW) strike that lingered into October will likely hit operating margins, Stellantis is expected to see revenue jump over 5% to 189.3 million euros, and adjusted net income to climb 9.7% year over year to 18.4 billion euros, per Bloomberg estimates.
Stellantis CEO Carlos Tavares was criticized in the past for not moving faster with the company’s EV transition; now he is looking prescient as demand for EVs has seemingly waned in recent months. Shares of fellow Big Three automakers Ford and GM have surged following strong earnings reports, as the two Michigan-based automakers’ traditional gas-powered businesses are projecting robust profits for 2024.
Investors will be looking for Stellantis to offer more of the same with an outlook that sees profit growth and limits EV capital expenditure outlays.
Earnings breadth expands
Broadly earnings have been coming in increasingly positive. With 75% of S&P 500 companies having reported earnings, the benchmark index is on pace to report its second straight quarter of earnings growth. And, notably, analysts see earnings growth continuing throughout the next two years.
In a note to clients on Friday, Deutsche Bank chief equity strategist Binky Chadha highlighted that 83% of US companies are beating earnings estimates. Per Chadha's research, this is the highest mark in two years and "well above the upper end of its pre-pandemic range." It's also significantly higher than the beat rates in other countries, which could be an indicator of why US stocks are outperforming other markets.
"Such elevated beats have historically been seen only in the early stages of recovery from major cyclical downturns," Chadha wrote.
Several strategists recently noted a similar trend to Yahoo Finance when explaining how the S&P 500 could rise to new highs later this year without outsized contributions from a few large tech stocks that have been driving the market action as of late.
"As investors stop worrying so much about exactly when the Fed will start to cut rates, I think we'll see a lot of these companies outside of the Magnificent Seven have pretty strong earnings growth, and that will cause them to do pretty well in turn," Goldman Sachs equity strategist Ben Snider told Yahoo Finance.
Weekly calendar
Monday
Economic data: New York Fed one-year inflation expectations, January (3.01% previously)
Earnings: Avis Budget Group (CAR), Monday.com (MNDY), Waste Management (WM), Zoominfo Technologies (ZI)
Tuesday
Economic data: NFIB Small Business Optimism, January (91.9 previously) Consumer Price Index, month-over-month, January (+0.2% expected, +0.3% previously); Core CPI, month-over-month, January (+0.3% expected, +0.3% previously); CPI, year-over-year, January (+2.9% expected, +3.4% previously); Core CPI, year-over-year, January (+3.7% expected, +3.9% previously); Real average hourly earnings, year-over-year, January (+0.8% previously)
Earnings: Airbnb (ABNB), AutoNation (AN), Biogen (BIIB), Coca-Cola (KO), Datadog (DDOG), Hasbro (HAS), Instacart (CART), Marriott International (MAR), Lyft (LYFT), MGM Resorts (MGM), Moody's (MCO), Robinhood (HOOD), Shopify (SHOP), Upstart (UPST), Zillow Group (ZG)
Wednesday
Economic data: MBA Mortgage Applications, week ending Feb. 9 (+3.7%)
Earnings: Albemarle (ALB), Cisco (CSCO), CME Group (CME), Generac (GNRC), Kraft Heinz (KHC), Occidental (OXY), Sony (SONY), Sunoco (SUN), Twilio (TWLO)
Thursday
Economic data: Initial jobless claims, week ending Feb. 10 (218,000 previously); Retail sales, month-over-month, January (-0.2% expected, +0.6% previously); Retail sales ex auto and gas, January (+0.2% expected, +0.6% previously); Import prices, month-over-month, January (-0.1% expected, +0.0% previously); Export prices, month-over-month, January (-3.2% previously); Industrial production, month-over-month, January (+0.4% expected, +0.1% previously); NAHB housing market index, February (44 prior)
Earnings: Applied Materials (AMAT), Coinbase (COIN), Crocs (CROX), DoorDash (DASH), DraftKings (DKNG), John Deere (DE), Penn National (PENN), Oatly (OTLY), Roku (ROKU), Stellantis (STLA), The Trade Desk (TTD), Toast (TOST), Wendy's (WEN), Yeti (YETI)
Friday
Economic data: Producer Price Index, month-over-month, January (+0.1% expected, -0.1% previously); PPI, year-over-year, January (+1% previously); University of Michigan consumer sentiment, February preliminary (79.0 expected, 79.0 previously); Building permits month-over-month, January (1.5% expected, 1.8% previously)
Earnings: Air Canda (ACDVF), Cinemark (CNK)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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