Traders on the floor of the NYSE, October 21, 2022.
S&P 500 futures fell slightly on Sunday night, ahead of another run of retail earnings to kick off a shortened week before Thanksgiving.
Futures linked to the broad market index were 0.1% lower. Dow Jones Industrial Average futures were down 38 points, or 0.1%. Nasdaq 100 futures hovered on the flat line.
The main averages each posted a day up but a week down in the previous trading session. The Dow rose nearly 200 points, or 0.6%. The S&P climbed 0.5% and the Nasdaq Composite finished just 0.01% above the flat line.
Investors have been reflecting on the strength of the recent bear market rally, which began earlier this month with October’s consumer price index reading and gained momentum with last week’s wholesale price reading. Traders were locked in last week’s reports from Federal Reserve officials, who were less than impressed with the data and reconsidered their optimism about the possibility of inflation slowing.
Ed Yardeni of Yardeni Research said he thinks the Oct. 12 low was the bottom and the S&P 500 could rise to nearly 4,300 by the end of the year, he told CNBC on “Closing Bell: Overtime” Friday night. The reference index currently stands at 3,965.34.
“What makes the big difference in the market is the resilience of the economy, which has been spectacular,” he said. “Everyone has been debating whether we’re going to have a soft landing or a hard landing — when there’s no landing at all. The consumer hasn’t gotten the recession memo and they’re continuing to spend money.”
Retail sales rose in October, but at the corporate level, Target reported slowing demand and Amazon announced it would lay off 10,000 workers — though Home Depot and Walmart have reported strong results.
“Despite what holiday spending suggests, retail stocks tend to be in the top three in November, but in the bottom three in December, and somewhere in the middle of the pack in January,” said Liz Young, chief investment strategist at SoFi. . said in a note this weekend.
“Seasonality plays a role in market analysis and has a certain predictive power. But the power of the economic cycle is stronger no matter the time of year,” she added. “With 375 basis points of Fed rate hikes so far, an inverted yield curve, spikes in inflation and commodity prices still part of the story, we can almost conclude that we are late in the economic cycle.”
This week, a historically quiet week leading up to Thanksgiving, investors will be busy with a new batch of retail earnings to digest ahead of the start of the post-holiday shopping season. Best Buy, Nordstrom, Dick’s Sporting Goods and Dollar Tree are among the companies on deck.
Investors will also receive a flurry of economic reports, including durable goods, new home sales, unemployment claims and consumer confidence, as well as the release of minutes from the last Federal Reserve meeting.
Next week is a short one. The market is closed on Thursday for Thanksgiving. On Friday, the stock market closes at 1pm ET and the bond market closes at 2pm ET.