Traders on the NYSE floor, October 21, 2022.
S&P 500 futures fell slightly on Sunday evening ahead of another set of sales earnings to kick off a short week for the Thanksgiving holiday.
Futures tied to the broader market index were up less than 0.1%. Dow Jones Industrial Average futures were down 38 points, or 0.1%. Nasdaq 100 futures hit a flat line.
In the previous trading session, the major indexes each posted a daily high but a weekly low. The Dow rose nearly 200 points, or 0.6%. The S&P climbed 0.5% and the Nasdaq Composite ended just 0.01% flat.
Investors took some credit for the strength of the recent bear market rally, which began at the beginning of the month with October’s consumer price index reading and last week’s reading on grocery prices. Traders last week reacted to messages from Federal Reserve officials, who were less impressed by the numbers and revised their optimism around the possibility of a slowdown in inflation.
Ed Yardeni of Yardeni Research said that in his view, the Oct. 12 low was below and the S&P 500 could reach 4,300 by the end of the year, he told CNBC on Friday night’s “Closing Bell: Overtime.” The benchmark index currently sits at 3,965.34.
“The thing that makes the biggest difference in the market is the resilience of the economy, it’s been interesting,” he said. “Everybody’s debating whether we’re going to have a soft discount or a hard discount — in the meantime, there’s no discount. Consumers didn’t get the memo of the recession and they’re spending.”
Retail sales rose in October, but at the corporate level Target reported a slowdown in demand and Amazon announced it would lay off 10,000 employees – although Home Depot and Walmart reported strong results.
“Despite what holiday season spending suggests, retail stocks are in the top three for November, but in the bottom three for 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 has a place in market analysis and has predictive power. But the power of the economic cycle is stronger, regardless of the time of year,” she added. “With 375 basis points of Fed rate hikes so far, an inverse yield curve, rising inflation, and commodity prices still part of the narrative, we can all conclude that we are late in the economic cycle.”
This week, ahead of a historically quiet Thanksgiving, investors will be dealing with another batch of retail earnings to act on before the start of the post-holiday shopping season. Best Buy, Nordstrom, Dick’s Sporting Goods and Dollar Tree are among the companies on board.
Investors will also receive economic reports, including durable goods, new home sales, jobless claims, and consumer sentiment, as well as the release of minutes from the next Federal Reserve meeting.
Next week is a short week. The market will be closed Thursday for Thanksgiving. On Friday, the stock market will close at 1:00 PM ET and the bond market will close at 2:00 PM ET.