Retail Sales Data in Focus As S&P 500 Giants to Report Earnings This Week
November 14 2022 - 04:30PM
The equity markets in the United
States rose yet again on Friday to close out a strong week. All
major indices, including the Dow Jones, the
S&P 500, and
the Nasdaq Composite index, gained momentum after a
lower-than-expected rise in consumer inflation data drove optimism
higher on hopes the Federal Reserve will ease its monetary
tightening measures in the next 12 months.
Corporates and households have
been wrestling with rising interest rates and red-hot inflation in
2022, which have impacted consumer spending as well as enterprise
sales and profit margins across sectors.
In the last week, the Dow Jones
index rose by 4.2% while the S&P 500 and Nasdaq Composite
surged by 6% and 8%, respectively. Additionally, the easing of
COVID-19-related restrictions in China resulted in an uptick in oil
energy stocks rose higher due to the possibility of increased
demand for fossil fuels.
Let’s now see what is in store
for investors in the next week.
Retail sales and earnings will drive investor
The largest big-box retailers,
including Walmart (NYSE: WMT), Target (NYSE:
LOW), Macy’s (NYSE:
Home Depot (NYSE:
HD), are scheduled to
report quarterly earnings this week. According to estimates from
Yahoo Finance for the last quarter, the earnings for:
Walmart earnings are forecast to
fall by 9% YoY
Lowe’s earnings are forecast to
rise by 13.6% YoY
Target earnings are forecast to
fall by 30% YoY
Macy’s earnings are forecast to
fall by 84.6% YoY
Home Depot’s earnings are
forecast to rise by 4.6% YoY
Big-box giants such as Walmart
and Target’s earnings might contract as the companies have slashed
product prices to reduce inventory levels due to lower spending by
households amid a challenging macro-environment.
The U.S. Census Bureau will also
publish retail sales data for October, which is a key indicator of
consumer spending. According to experts, retail sales growth is
projected at 0.8% for the month of October, similar to the reading
An increase in commodity prices,
including food and fuel, will expectedly impact discretionary
spending for individuals and households to account for the higher
costs of debt and interest payments. It will be interesting to see
if the holiday season will boost retail spending in Q4 of
Housing market insights
The U.S. housing market will also
be in focus with the release of the NAHB Housing Market Index this
Wednesday. A day later, the U.S. Census Bureau will publish data on
housing starts and building permits for October.
Housing starts are expected to
fall to 1.42 million in October, from 1.44 million in September and
a peak of 1.81 million in April.
Finally, the National Association
of Realtors will release existing home sales figures for October on
Friday. Existing home sales are expected to fall from 4.71 million
in September to 4.36 million in October. It would be the ninth
consecutive month of decline for existing home sales after it
peaked at 4.69 million in January 2022.
As the average 30-year fixed-rate
mortgages are hovering around 7%, the demand for home loans should
plummet even further by the end of 2022.
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