Week Ahead on Wall Street: Inflation and Earnings Season

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New Year

It hasn’t been the happiest New Year in the U.S. stock market, which started 2024 on the back foot.

The big questions: How much upside is left for last year’s leading stocks, keeping some inevitable portfolio rebalancing for the new tax year in mind. Then there’s the matter of potential interest rate cuts by the Federal Reserve. Market pricing-implied expectations for rate cuts have been rolled back a bit, but are still higher than what the Fed itself expects per its projections released in December.

This brings us to the week ahead, with two main themes standing out: the release of both consumer and wholesale inflation data for December, and the unofficial start of earnings season with numerous big reports slated for Friday. Since the Fed continues to highlight the importance of reacting to data as it comes in, investors will look for signs of the strength of the economy and the underlying inflation trend to get a better idea of what might lie ahead in 2024.

Economic Data and Earnings Reports

Monday

• December NY Fed Survey of Consumer Expectations: This measures peoples’ expectations for inflation, jobs prospects, earnings growth, and more.
• November Consumer Credit: Borrowing activity gives insight into broader economic activity. It has trended lower as interest rates have risen, but is poised to turn higher.

Tuesday

• December NFIB Small Business Optimism: This measures how small business owners feel about current and future economic conditions.
• November Trade Balance: Trade, made up of exports and imports, is an important driver of economic activity.

Wednesday

• Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market.
• November Wholesale Inventories and Sales: Wholesalers often operate as an intermediary between manufacturers and retailers, serving as a key part of the goods supply chain.

Thursday

• December Consumer Price Index: The CPI is likely the most popular indicator for tracking price trends that consumers face and is a marquee release for market watchers. It is down notably from its peak in 2022 but remains somewhat above pre-pandemic levels.
• Weekly Jobless Claims: These weekly releases give a relatively high frequency look at what’s going on in labor markets. Jobless claims have continued to show a labor market that remains strong despite having cooled.

Friday

• December Producer Price Index: The PPI tracks price trends that producers face and is down significantly from its peak earlier in the cycle.
• Earnings from Bank of America (BAC), Bank of New York Mellon (BK), Blackrock (BLK), Citigroup (C), Delta Air Lines (DAL), JPMorgan Chase (JPM), UnitedHealth Group (UNH), Wells Fargo (WFC). Earnings season gets started in earnest with several big banks and other important bellwethers reporting results. Friday will likely set an important tone for the rest of earnings season.

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