Stocks ended last week lower, with the Nasdaq Composite Index (^IXIC) falling more than 1% as tech stocks led losses.
Still, the equal-weighted S&P 500 posted its seventh straight weekly gain, as investors continue to look outside the “Magnificent Seven” of tech leaders for the market's next upswing. Recorded.
Over the coming week, investors will be looking ahead to the February Consumer Prince's Index (CPI) report on Tuesday, which will provide an updated look at inflation, the last big before the Federal Reserve's meeting on March 20. You will face trials. Reports on retail sales and consumer sentiment will be published in the economic calendar later in the week.
Earnings decline schedules are expected, with Dollar Tree (DLTR), Dollar General (DG), Dick's Sporting Goods (DKS), Adobe (ADBE), and Ulta Beauty (ULTA) highlighting the list in their quarterly reports. ing.
price check
Federal Reserve Chairman Jerome Powell has repeatedly said the central bank wants more “confidence” in the downward path of inflation. before interest rate cuts.
Tuesday's CPI readings followed a stronger-than-expected January report that showed the decline in inflation could be “bumpy” and prompted investors to price in less rate cuts this year. The announcement was made in response to this.
Wall Street expects headline inflation to register an annualized 3.1% rise in February, unchanged from January's headline rate, according to Bloomberg estimates. Prices are expected to rise 0.4% month-on-month, further expanding from January's 0.3% rise.
On a “core” basis, excluding food and energy, prices are expected to rise 3.7% year-on-year, slowing from January's 3.9% rise. Monthly core price growth is expected to be 0.3%, lower than January's 0.4% rise.
“January CPI data was stronger than expected, raising new concerns about how quickly inflation could fall,” Wells Fargo's Jay Bryson and his team of economists said in a research note Friday. .
“Despite the strong start to the year, we believe that ultimately the disinflationary trend is sustained.While inflation remains frustratingly high, the underlying trend is strengthening. We expect February's statistics to show that this is not the case.
Retail rebound?
Retail sales in January recorded the sharpest decline since March 2023.
But economists do not expect this trend to continue in February.
Economists forecast in a report Thursday morning that retail sales would rise 0.8% in February from the previous month, recovering from a 0.8% decline in the first month of the year.
Economists expect sales excluding autos and gas to rise 0.2% from a month earlier, compared with a 0.5% decline in January, according to Bloomberg data.
“Retail sales are likely to recover in February following weather-related weakness in January and an active tax refund season,” economists at Oxford Economics said in a note Friday, adding that “consumption “Growth will remain on track to exceed 2% per year.” It was profitable and on a strong pace in Q1. ”
market changes
Market movements after Friday's jobs report showed a clear change in trading behavior.
Nvidia (NVDA) fell nearly 5% after weeks of AI-fueled stock market gains. Other popular tech stocks that capitalized on the AI hype also slumped, with Arm Holdings (ARM) and Dell (DELL) in particular dropping about 4%.
The move follows disclosures of discrepancies in the Magnificent Seven's dealings. In particular, it has lagged behind the performance of Apple and Tesla. Strategists say this could extend the market's upside even further.
This trend has been visible throughout this week, with the equally weighted S&P 500 index hitting its highest level in more than two years. This index and the small-cap Russell 2000 Index (^RUT) outperformed the broader market during Friday's selloff.
“We think MagSeven will become RagSeven,” Craig Johnson, chief market engineer at Piper Sandler, told Yahoo Finance Live.
“At this point, you're going to start to see this market expand.”
Fewer companies mention recession
Johnson's call to extend market gains into 2024 has been echoed across Wall Street. The rationale for other stocks' gains is rooted in higher earnings expectations for stocks other than tech leaders and the overall health of the U.S. economy.
That story remains largely intact. Michael Feroli, JPMorgan's chief U.S. economist, said after February's jobs report that the company's second-quarter gross domestic product (GDP) outlook was at an annualized rate of 0.5% to 1.5% due to continued strength in the labor market. He pointed out that it had been pushed up to %.
Strategists believe this improved economic outlook will be reflected not only in tech stocks but also in corporate earnings. And companies are telling similar stories.
According to a FactSet survey, 47 S&P 500 companies cited the word “recession” in their earnings calls from Dec. 15 to March 7. The number of companies mentioning this phrase is the lowest in two years and below the 5-year and 10-year mention averages.
weekly calendar
Monday
economic data: New York Fed's 1-year inflation expectations, February (previously 3%)
revenue: Asana (ASAN), Casey's (CASY), Oracle (ORCL), Vail Resorts (MTN)
Tuesday
economic data: NFIB small business optimism, February (previously 89.9) February consumer price index, month-over-month (forecast +0.4%, previous +0.3%). February core CPI, month-on-month (forecast +0.3%, previous +0.4%). February CPI, year-on-year change (forecast +3.1%, previous +3.1%). February core CPI, year-on-year change (forecast +3.7%, previous +3.9%). Real average hourly wage in February, year-on-year increase (previous increase of 1.4%)
revenue: Allbirds (BIRD), Clover (CLOV), Coles (KSS), Manchester United (MANU), ON Holdings (ONON)
Wednesday
economic data: MBA home loan applications, week ending March 8 (+9.7%)
revenue: Dollar Tree (DLTR), Lennar (LEN), Vera Bradley (VRA), Williams Sonoma (WSM)
Thursday
economic data: Number of new unemployment insurance claims for the week ending March 9 (previously 217,000). Retail sales in February compared to the previous month (forecast +0.8%, previous -0.8%). Retail sales (excluding autos and gasoline), February (+0.2% expected, -0.5% previously). Producer price index for February, month-over-month (forecast +0.3%, previous +0.3%). February PPI, year-on-year change (previously +0.9%)
revenue: Adobe (ORCL), Blink (BLNK), Build-A-Bear (BBW), Dollar General (DG), Dick's Sporting Goods (DKS), Ulta Beauty (ULTA)
Friday
economic data: University of Michigan Consumer Sentiment, preliminary figures for March (expected 77.0, previous 76.9). February import prices compared to the previous month (forecast +0.2%, previous +0.8%). February export prices compared to the previous month (forecast +0.1%, previous +0.8). Industrial production, month-on-month change, February (forecast +0.0%, previous -0.1%)
revenue: There are no notable revenues scheduled for release.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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