Top Things to Keep in Mind This Week: Stay Updated and Informed

Stock market bulls are facing a major obstacle as the week ahead is focused on the Federal Reserve’s preferred inflation measure. On Thursday, the release of the Personal Consumption Expenditures (PCE) index for October is expected to show a 3.5% annual rise in “core” PCE inflation, which is the Fed’s preferred gauge. Additionally, there will be updates on manufacturing activity, consumer confidence, and home prices on the economic calendar.

Meanwhile, corporate investors are looking to the upcoming quarterly reports from Salesforce (CRM), Snowflake (SNOW), Okta (OKTA), Dollar Tree (DLTR), Foot Locker (FL), Kroger (KR), and Ulta Beauty (ULTA).

Stocks recently saw a rally, and with an optimistic narrative bolstering the market, Thursday’s inflation reading will offer a final chance for economic data to alter this trajectory. According to economists, this reading will determine if the US economy is heading for a “soft landing,” in which inflation retreats to the central bank’s 2% target without a severe economic downturn. Recent economic data has shown that the economy is headed in that direction, sending areas of the stock market, such as small cap stocks and meme stocks, into rally mode.

This economic data has also influenced expectations for the Fed, with markets currently pricing in only a 12% chance of the Fed raising rates again, according to data from the CME Group.

Annual inflation according to the Fed’s favored gauge, “core” PCE, is expected to clock in at 3.5% in October while monthly rises are forecasted at 0.2%. These figures show a better alignment with the Fed’s 2% target than October’s 12-month gain. In light of this data, JPMorgan’s chief US economist Michael Feroli predicts the Fed’s next move toward easier policy to take place in Q3 2024.

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Furthermore, the upcoming corporate results will provide insights into the health of the consumer, the state of software demand, and the impact of AI on these businesses. Particularly, Foot Locker, Ulta Beauty, Dollar Tree, and Salesforce’s upcoming earnings will be closely monitored for forecasts regarding the holiday season and the response of consumers to elevated interest rates and a softening labor market. Additionally, Salesforce’s guidance for the current quarter will be scrutinized, providing a glimpse into how companies are responding to cloud service price increases and demand for AI products.

Weekly calendar

Monday

Economic data: Dallas Fed Manufacturing Activity, New home sales

Earnings: Zscaler (ZS)

Josh Schafer is a reporter for Yahoo Finance.

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