Traders on the floor of the NYSE, October 21, 2022.
S&P 500 futures fell slightly on Sunday afternoon ahead of another batch of retail earnings to kick off a shortened week for the Thanksgiving holiday.
Futures tied to the broad market index were lower by 0.1%. Dow Jones Industrial average futures were lower by 38 points, or 0.1%. Nasdaq 100 futures maneuver at the flat line.
The major media posted a day up only a week ago 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 are reflecting on the strength of the recent bear market trend, which began earlier in the month with the October consumer price index reading and gained some steam with last week’s wholesale price reading. Traders hung last week on messages from Federal Reserve officials, who were less impressed with the figures and reassessed their hopes for the possibility of slowing inflation.
Ed Yardeni of Yardeni Research said he thinks the Oct. 12 low was the bottom and the S&P 500 could rise to near 4,300 by the end of the year, he told CNBC on Friday night’s “Closing Bell: Overtime.” . The benchmark index is currently 3,965.34.
“What’s making the big difference in the market is the resilience of the economy, it’s amazing,” he said. “Everyone is debating whether we will have a soft landing or a hard landing – in the meantime, there is no landing at all. The consumer didn’t get the memo of the recession and they keep spending.”
Retail sales rose in October, but at the corporate level Target reported slowing demand and Amazon announced it will lay off 10,000 employees – although Home Depot and Walmart reported strong results.
“Despite what holiday season spending might suggest, retail stocks tend to be in the top three for November, but in the bottom three for December, and somewhere in between the package in January,” Liz Young, SoFi’s chief investment strategist, said in a note this weekend.
“Seasonality has a place in market analysis and has some predictive power. But the power of the economic cycle is stronger, no matter the time of year,” she said. “With 375 basis points of fed rate hikes to date, an inverted yield curve, inflation spikes, and commodity prices still part of the story, we can all but conclude that we are late in the economic cycle.”
This week, a historically quiet one leading up to Thanksgiving, investors will be busy with another group of retail earnings digests 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 find plenty of economic reports, including durable goods, new home sales, unemployment claims, and consumer sentiment, as well as the release of the minutes from the last Federal Reserve meeting.
The week ahead is a short week. The market will be closed Thursday for Thanksgiving. On Friday, the stock exchanges will close at 1 pm ET and the bond market will close at 2 pm ET.