Retail Earnings Under the Radar For S&P 500 Investors This Week
May 15 2023 - 06:52AM
Finscreener.org
The S&P
500 index experienced a
downturn on Friday amid growing worries about the US economy,
causing a dip in investor confidence. The University of
MichiganU+02019s preliminary consumer sentiment index reading
dropped to a six-month low of 57.7, falling short of the
anticipated May reading of 63.0 predicted by Dow Jones
economists.
Furthermore, expectations for
inflation in the upcoming five years escalated to 3.2%, a figure
not seen since June 2008.
Debt ceiling negotiations in
Washington have also become a focal point for investors. A key
meeting scheduled between President Joe Biden and congressional
leaders to discuss this issue was deferred until the following
week, adding to the unease.
In an interview with CNBC, Joe
Cusick, a senior vice president at Calamos Investments, noted a
general lack of market conviction, with no sectors making decisive
moves in any direction. This lack of confidence contributed to a
second consecutive week of losses for the S&P 500 and
Dow Jones, dropping by
0.29% and 1.11%, respectively. Conversely, the Nasdaq managed a slight gain of 0.4%.
Despite ThursdayU+02019s
lower-than-expected wholesale prices data, which ordinarily signals
easing inflation, investor concerns over a potential downturn
remain high as the market continues to be carried by a select few
stocks.
Retail earnings to drive S&P 500
index
Next week, key retailers such
as Walmart (NYSE: WMT), Target (NYSE:
TGT), Home
Depot (NYSE:
HD), and
Alibaba (NYSE:
BABA) are set to announce their earnings. Walmart is
predicted to record adjusted earnings per share (EPS) of $1.19 per
share, compared to its year-ago earnings of $1.3 per share.
Comparatively, earnings for Target are also forecast to narrow from
$2.19 per share to $1.77 per share.
We can see that big-box discount
retailers are still reeling under pressure due to rising costs,
inflation, and high inventory levels due to a sluggish
economy.
The U.S. Census Bureau will also
reveal AprilU+02019s retail sales on Tuesday, reflecting consumer
spending. After a 0.6% decrease in March, retail sales are
anticipated to have grown by 0.7% in April, yet the year-over-year
increase could be just 1.4%, marking the slowest rate since the
pandemic began three years ago.
ConsumersU+02019 outlook on the
economy has soured due to increasing interest rates, continuous
high inflation, and recession fears. In fact, the University of
Michigan’s Consumer Sentiment Index (MCSI), an essential indicator
of consumer confidence, hit its lowest point since November in
early May.
Housing market data
Next week will bring fresh data
on the housing market. The NAHB Housing Market Index for May will
kick off the updates on Tuesday. Following this, on Wednesday, the
Census Bureau will present figures on AprilU+02019s housing starts
and building permits, which provide insights into home construction
and supply.
Predictions suggest a minor dip
in housing starts to 1.4 million units in April, from 1.42 million
in March. On Thursday, the National Association of Realtors (NAR)
will release data on existing home sales for April. The numbers are
anticipated to show a decrease to 4.3 million units, from 4.44
million in March, and are down significantly from the January 2022
peak of 6.34 million units.
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