Consumer Price Index, Retail Sales And A Possible Government Shutdown

Stocks are coming off two solid weeks of gains as we near the holiday season and what has historically been a good period for stocks. The S&P 500 has been up nine out of the past ten sessions, gaining over 7% in the past couple of weeks. For the year, the S&P is up 15%. The Nasdaq Composite has fared nearly as well with gains in eight out of the past ten sessions. That has resulted in gains of 9% over two weeks and a year-to-date return of 32%. With earnings season all but over, investors now need to wait on economic data scheduled for release in the coming weeks and one final Fed meeting before closing out the year.

There is a host of economic data coming out this week, kicking off with tomorrow's Consumer Price Index (CPI). The report is expected to show consumer prices increased 0.1% month-over-month and 3.3% year-over-year. Core CPI, which excludes prices for food and energy, is expected to be up 0.3% month-over-month and 4.1% year-over-year. As things currently stand, there is an 86% the Fed will leave rates untouched when they meet next month, according to the CME. A surprisingly strong report could change that; however, it's unlikely a weaker than expected report would lead to a rate cut.

Also, this week, the government has until Fridayto pass a spending bill. House Speaker Mike Johnson is expected to propose a continuing resolution bill that would then give members of Congress a chance to negotiate individual spending bills. On Friday, Moody's threatened to downgrade the United States credit rating if a bill is not passed, a move that Fitch Rating already undertook earlier this year. In situations such as this, I look to VIX for signs as to whether or not the market is concerned and based on that, I would say the market expects this to be a non-issue.

Taking a quick look at earnings, most of the major names have reported but this week has a slew of retail companies reporting. Home Depot will report on Tuesday before the open and then Target reports before the open on Wednesday. Macy's and Walmart also report later in the week. Mixed in between we'll get a look at October Retail Sales. Finally, Applied Materials is scheduled to report Thursday after the close.

A couple other odds and ends, the latest installment of the Marvel series was released over the weekend with disappointing results. The Marvels took in just $47M in U.S. sales, the weakest debut of all Marvel films. President Biden and Chinese President Xi Jinping are expected to meet this week at a summit in San Francisco. There are hopes that meeting will clear the way for Boeing to sell its 737 Max and reenter the Chinese market, ending a commercial freeze. Boeing also closed a $52B deal to sell a double-digit number of 777X widebody models to the Emirates.

For the week, the S&P 500 SPY ETF Trust has an expected move of over 5 points up or down and the Nasdaq 100 QQQ ETF Trust has an expected move of almost 6.5 points. With economic data and earnings scheduled throughout the week, as well as a looming government shutdown, there could be a bit more activity than we saw last week. As always I would stick with your investing strategy and long-term plans.

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