The First Slice for Monday, May 23, 2022

If there’s more bad news from retailers in the coming week, that could be a negative catalyst for an already cranky stock market.

Market pros are watching for more signs that stocks could be bottoming, though strategists say that is a tricky prospect and there could be false signals. The S&P 500, on an intraday basis, fell into a bear market for the first time Friday — trading more than 20% below its record high reached in January.

The S&P 500 also dipped below its closing record high of 3,837.24. If the benchmark were to close below that level, Wall Street pros would consider it a bear market. 

While there is no official determination on what a bear market is, traders look to that 20% marker as a way to give context to stock market declines. But they do say the extent of the bear market, or how far stocks could fall, depends strictly on the performance of the economy.

Stocks were sharply lower in the past week, despite the fact strategists had been expecting the oversold market to bounce.The market initially rallied, until earnings misses from Walmart and Target blew up the gains.

The surprising weakness in those two big stalwart retailers crushed their stocks hammered the retail sector and took the entire market lower on fears the consumer is wobbling and other companies will also have earnings issues.

Earnings from CostcoBest Buy and others, as well as personal consumption expenditures data, could be important in the coming week as investors weigh how much the consumer is stumbling. The PCE includes data on spending, income, and inflation.

Other retailers reporting earnings in the coming week include Ulta BeautyMacy’s, Dick’s Sporting Goods, and discounters Dollar Tree and Dollar General. Their reports and comments could help clarify whether the consumer is more broadly weakening, and how much inflation and supply chain snarls continue to hurt the stores and the economy.

The reports from Walmart and Target came as the market was also assessing a very strong April retail sales report, showing spending jumped 8.2% year over year.

In the coming week, the economic calendar includes the Federal Reserve’s minutes from its last meeting on Wednesday, the second look at first-quarter gross domestic product Thursday, as well as PCE data on Friday. The PCE data also includes the PCE inflation index, watched closely by the Fed.

Week ahead calendar

Monday

Earnings: Zoom Video, Advance Auto Parts

12:00 p.m. Atlanta Fed President Raphael Bostic

Tuesday

Earnings: Autozone, NordstromBest Buy, Abercrombie and Fitch, Ralph Lauren, Petco, Agilent, Toll Brothers, NetEase

9:45 a.m. Manufacturing PMI

9:45 a.m. Services PMI

10:00 a.m. New home sales

Wednesday

Earnings: Nvidia, Dick’s Sporting Goods, Express, Bank of Montreal, Box, Nutanix

8:30 a.m. Durable goods

2:00 p.m. FOMC minutes

Thursday

Earnings: Costco, Macy’s, Autodesk, Gap, Dell Technologies,Dollar Tree, Dollar General, Ulta Beauty, Lions Gate, VMware, Baidu, Alibaba, Medtronic, Burlington Stores, American Eagle Outfitters, Toronto Dominion, Jack in the Box, Buckle, Workday,Sumo Logic

8:30 a.m. Jobless claims

8:30 a.m. Real GDP (Q1 second estimate)

10:00 a.m. Pending home sales

Friday

Earnings: Canopy GrowthBig Lots

8:30 a.m. Advance economic indicators

8:30 a.m. Wholesale Inventories

8:30 a.m. Personal income/spending

8:30 a.m. PCE deflator

10:00 a.m. University of Michigan consumer sentiment

Full Loaf Hot Link[read more] Original Article By: Patti Domm

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