Federal Data Highlights Labor Report and Inflation Figures, Nasdaq Rebounds, and Earnings Focus on Best Buy and Lululemon
As the week ahead unfolds, investors will turn their attention to key data points that will shed light on the state of the economy. The recent remarks by Federal Reserve chair Jerome Powell, emphasizing the central bank’s readiness to raise rates further, have put the spotlight on the upcoming labor report and an updated look at inflation.
The Personal Consumption Expenditures (PCE) index, considered the Fed’s preferred inflation indicator, is scheduled to be released on Thursday morning. Investors will closely analyze this data to gauge the current inflationary pressures. Additionally, the highly anticipated August jobs report is expected on Friday, providing insights into the health of the labor market.
To assess the overall employment situation, investors will also monitor the weekly jobless claims data and the monthly report on private payrolls from ADP, both due out on Thursday. Furthermore, Tuesday brings the release of the monthly job openings data, which will attract investor attention. Other significant data points to watch for include fresh updates on housing prices and manufacturing prices.
On the corporate side, Best Buy, Lululemon, and Salesforce are among the key players reporting their earnings. With the quarterly reporting season winding down, these companies’ performance will provide insights into various sectors.
Stocks have experienced a slowdown in August, with the Nasdaq, S&P 500, and Dow Jones Industrial all in the red over the past month. However, the Nasdaq found some reprieve last week as investors flocked to this tech-heavy index ahead of Nvidia’s blowout quarterly report.
During a speech at the Jackson Hole Economic Symposium, Powell acknowledged the strong economy but expressed the need for further tightening if inflation does not continue its downward trajectory. This week’s data will be crucial in evaluating the progress of the economy and its potential impact on monetary policy.
The upcoming data on Thursday is expected to reveal that core PCE, which excludes food and energy costs, rose 4.2% in July compared to the previous year, up from 4.1% in June. The Fed’s target inflation rate is 2%. Meanwhile, Friday’s jobs report is expected to show an addition of 168,000 jobs in August, with the unemployment rate remaining flat at 3.7%. These numbers reflect a gradual slowdown in the labor market.
Some experts speculate that the labor strikes across industries may impact this month’s report, potentially driving down job growth. However, it remains to be seen whether this will lead to a monetary policy response, as Powell suggested.
Turning to the retail sector, recent earnings reports have indicated a cautious consumer sentiment. Retailers like Dick’s Sporting Goods and Foot Locker have struggled, while others like Abercrombie & Fitch have thrived. Furthermore, increasing incidents of crime at stores have affected several chains. This week, Best Buy and Lululemon will provide further insight into the sector. Lululemon’s performance, in particular, will be closely watched as the company has been considered a relatively resilient retailer.
On the tech front, investors will be interested in Salesforce, Okta, and Crowdstrike’s earnings following Nvidia’s stellar performance, which had a ripple effect across the sector. Salesforce’s focus on artificial intelligence (AI) could draw significant market attention, as many companies have received muted reactions despite touting AI capabilities this quarter.
Nvidia’s earnings resulted in a significant revenue growth of over 100% compared to the same period last year and exceeded revenue expectations by nearly 30%. However, the stock saw a minimal increase in the following trading session. This has led some to believe that the AI hype cycle may be entering a new phase, where companies will have to demonstrate tangible results to meet the market’s expectations.
As the economy continues to evolve, it is essential to assess various data points, earnings reports, and market trends. The upcoming labor report and inflation figures, along with the earnings releases from Best Buy, Lululemon, and Salesforce, will likely fuel further discussions on the trajectory of the economy, monetary policy decisions, and sector performances. Investors should keep a close eye on these developments in the week ahead.
