Week Ahead on Wall Street: Inflation Update

The Path Forward

We’re all still digesting the results of last week’s presidential election and the Federal Reserve’s interest rate cut, but markets wait for no one.

This week brings key inflation data in the form of the Consumer Price Index (CPI) and Producer Price Index (PPI) reports. The data will help provide an update on how the Fed’s fight against inflation is going, which is a big driver of interest rates: Investors will likely expect fewer rate cuts if the inflation reports come in hot, and vice versa. In particular, investors will be sure to focus on whether or not housing inflation shows any further signs of slowing down, as housing costs have been a primary contributor to the cost of living crisis.

While election results aren’t fully known yet since several House races remain too close to call at the time of writing, investors expect Republicans to gain full control of government. This has led to consensus expectations for some sort of extension to the tax cuts set to expire next year, in addition to tariffs, and the continuation of aggressive spending.

Treasury yields have moved higher, with both growth and inflation expectations rising, and stocks reached new all-time highs, pushing the S&P 500 to the cusp of 6,000 points.

One big question mark in all of this is how Fed officials will react to the election results and this week’s data. What could that mean? If the Fed is committed to getting inflation down to its 2% target, expectations for higher growth and inflation could mean fewer rate cuts than expected, which could weigh on the market.

Economic and Earnings Calendar

Monday

• Veteran’s Day. Bond markets will remain closed.

• Earnings: Live Nation Entertainment (LYV)

Tuesday

• October NFIB Small Business Optimism: This measures how small business owners feel about current and future economic conditions.

• October New York Fed Survey of Consumer Expectations: This is a measure of peoples’ expectations for inflation, jobs prospects, earnings growth, and more.

• Senior Loan Officer Opinion Survey: This is a quarterly survey of large domestic banks, as well as U.S. branches and agencies of foreign banks, on bank lending practices and loan demand.

• Fedspeak: Fed Governor Christopher Waller will speak at the Clearinghouse 2024 annual conference. Richmond Fed President Tom Barkin will speak at the Baltimore Together Summit. Philadelphia Fed President Patrick Harker will give a speech on Fintech, AI & the Changing Financial Landscape.

• Earnings: Archer-Daniels-Midland (ADM), Home Depot (HD), Mosaic (MOS), Occidental Petroleum (OXY), Skyworks Solutions (SWKS), Tyson Foods (TSN)

Wednesday

• October Consumer Price Index: The CPI is one of the most popular indicators for tracking consumer price trends and is a marquee release for market watchers. CPI has come down notably from its peak in 2022 and is near pre-pandemic levels.

• October Treasury Statement: This summarizes the U.S. federal government budget by tracking government revenues and expenditures.

• Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market.

• Fedspeak: Dallas Fed President Lorie Logan will give opening remarks at an energy conference hosted by the Federal Reserve Banks of Dallas and Kansas City. St. Louis Fed President Alberto Musalem will give a speech on the economy and monetary policy, followed by moderated discussion and Q&A. Kansas City Fed President Jeffrey Schmid will give keynote remarks at the Dallas and Kansas City Fed energy conference.

• Earnings: Cisco (CSCO)

Thursday

• October Producer Price Index: The PPI tracks price trends that producers face and is down significantly from its peak earlier in the cycle.

• Weekly Jobless Claims: This high frequency labor market data gives insight into filings for unemployment benefits. Jobless claims have continued to show a labor market that remains strong despite having cooled.

• Fedspeak: Richmond Fed President Tom Barkin will participate in a fireside chat on the economy. Fed Chair Jerome Powell will speak at an event hosted by the Dallas Regional Chamber, Dallas Fed, and World Affairs Council of Dallas/Fort Worth. New York Fed President John Williams will give a speech at a NY Fed event centered around creating and improving markets to deliver investments to under-resourced communities.

• Earnings: Applied Materials (AMAT), Disney (DIS)

Friday

• November Empire State Manufacturing Activity: The New York Fed’s survey of manufacturing executives in the region on business conditions and their outlook.

• October Retail Sales: This measures spending at retail stores and is a key indicator of consumer demand.

• October Industrial Production and Capacity Utilization: The industrial sector accounts for much of the cyclical swings in economic activity.

• Earnings: Copart (CPRT), Ross Stores (ROST)

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