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Inflation, earnings in focus in the week ahead for markets

Yahoo Finance’s Alexandra Semenova joins the Live show to discuss the top economic data to watch this week, including inflation prints and earnings for Coinbase, Palantir, and other companies.

Video Transcript

BRAD SMITH: More key economic data is slotted for this week, helping to paint a fuller picture on the state of the US economy. And joining us now with all the details you need to know, we've got Yahoo Finance's Alexandra Semenova. Alexandra.

ALEXANDRA SEMENOVA: Hey, guys. Well, there is a renewed focus on inflation this week as investors try to anticipate what the Federal Reserve will do in the fall, especially after the knockout jobs report that we got on Friday affirmed that the labor market is still hot enough for the Fed to keep hiking rates aggressively. Investors will be closely watching several inflation reports due out this week with CPI, of course, front and center on Wednesday, serving as the broadest measure of how quickly consumer prices are rising across the economy.

We'll also get an inflation reading at the wholesale level with the producer price index on Thursday and unit labor costs, which is the sum of all wages paid to employees.

Now, the CPI is expected to come in slightly lower from the prior month, mainly due to lower gas prices. But the core measure is still going to remain hot. And you know, we're still expected to see prices rising at the fastest rate in four decades now.

And Friday's jobs report has certainly complicated the economic picture, because while it's certainly a good thing that the economy is still creating jobs, there's a renewed traction in wage gains which is contributing to the inflationary pressure and there's room for the Fed to keep hiking rates.

As Bank of America put it, this is a double-edged sword. So while it cooled some of the immediate recessionary worries, there's an increased risk now of a hard landing ahead.

BRIAN SOZZI: And earnings season, not done. We want it to be done. But it's not done yet, right?

ALEXANDRA SEMENOVA: I don't know, Brian, if you want it to be done. I think you live for this stuff. [LAUGHS] But yeah, the earnings season is winding down. 87% of companies in the S&P 500 have now reported. But we still have some big names due out this week. We have Disney, Coinbase, Rivian, and a few others on tap.

And you know, a better than feared earnings season has helped lift sentiment this summer contributing to the summer rally. But analysts at Morgan Stanley and Goldman Sachs are predicting that we're gonna see price-- we're gonna see profit margins contract next year. So the outlook is not in line with the sentiment that we're seeing in markets. And we're-- as Mike Wilson put it, we have seen the best of the rally so far.

BRAD SMITH: All right, a ton to keep an eye on this week. Yahoo Finance's own Alexandra Semenova breaking it down for us. Thanks so much, Alexandra.