US stocks are entering the new week with two main themes in focus: September inflation readings and a busier stretch of quarterly earnings. CNBC Investing Club says market sentiment is being shaped not only by company results, but also by elevated oil prices and higher bond yields, both of which are influencing expectations for the Federal Reserve’s next rate decision.
The key macro release is Wednesday morning’s consumer price index for September. Economists polled by FactSet expect headline CPI to rise 3.6% year over year, slightly above August’s 3.4%, while core CPI excluding food and energy is seen at 2.4%, unchanged from August. CNBC notes that, according to the CME FedWatch tool, markets are assigning more than an 80% chance that the Fed will leave rates unchanged in October, although investors still see scope for one more increase in December.
Thursday brings the producer price index, or PPI. It typically has less market-moving power than CPI, but it remains an important gauge of cost pressures across corporate supply chains. The data may offer clues on whether input costs are easing or continuing to rise, with implications for profit margins and eventually for prices paid by consumers.
Investors will also watch a broader run of economic reports. Existing home sales are due Tuesday, retail sales are scheduled for Thursday, and industrial production and capacity utilization will be released Friday. CNBC said the housing data will be especially relevant for assessing the outlook for companies such as Home Depot.
On the corporate side, Goldman Sachs is among the closely watched earnings reports, due Tuesday morning. Investors will be looking for signals on how a high-rate environment is affecting corporate funding, merger and acquisition appetite, and interest from private companies in going public. CNBC also said the stock market’s proximity to record highs could support some parts of the bank’s business, while fixed income, currencies, and commodities (FICC) is expected to be a weaker growth driver.
