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The Federal Reserve will take center stage in the coming days as Wall Street tries to put a mixed week behind it. The Dow Jones Industrial Average posted its seventh straight decline on Friday, its longest losing streak since 2020, on track to drop 1.8% for the week. The S & P 500 also had a losing week, falling 0.6%. However, the Nasdaq gained 0.34% thanks to its heavy exposure to large tech stocks. Although it has been a relatively light week of economic data, the two main reports—November’s consumer price index report on Wednesday, and Thursday’s November producer price index report—were significant. They represented the latest look at US inflation before the Fed convenes for a two-day policy meeting this week. The CPI, which is seen as the closer of the two readings because it covers the prices consumers pay, was in line with estimates, rising 2.7% over 12 months. A key flaw in the CPI report was the shelter index, which rose 4.7% annually, the latest sign of sticky housing inflation. Meanwhile, the PPI, which looks at wholesale inflation, was warmer than expected on Thursday, rising 0.4% for the month versus the Dow Jones estimate of 0.2%. However, the market still expects the Fed to cut rates by a quarter percentage point on Wednesday evening, which would narrow its target range from 4.25% to 4.5%. Signs of softening in the labor market help support the Fed’s case for lower rates. .SPX .IXIC,.DJI 1M Mountain One-month performance of the S & P 500 versus the Nasdaq Composite and the Dow Jones Industrial Average. Within the portfolio, the highlight of the week came on Thursday night, when Costco posted a solid set of quarterly results and Broadcom delivered an all-out blowout report. Costco offered further evidence that its stock valuation is warranted. Broadcom cemented itself as one of the biggest artificial intelligence winners on Wall Street, joining the trillion-dollar market cap club thanks to a 24.4% rise in Friday’s session. Broadcom was, perhaps unsurprisingly, the top performing stock in the S&P 500 for the week, gaining 25.2%. However, that wasn’t enough to lift the broader tech sector into the green during the week. Only two of the 11 sectors in the S&P 500 ended in positive territory: communications services and consumer discretionary. The performance of the communication services is due to a nearly 9% increase in the shares of Google Alphabet, the Club’s holding. Investors cheered a breakthrough in quantum computing announced by Google, as well as General Motors’ launch of its Cruise robotaxi service, which is good news for Alphabet-owned Waymo. Tesla stock’s 12% weekly gain was the driver of consumer discretionary performance. The electric vehicle maker’s stock is now up more than 70% since Donald Trump won the presidential election in November. Jim interviewed Trump after the opening bell at the New York Stock Exchange on Thursday and got his thoughts on AI, electricity demand and the capital market. Materials, utilities and real estate were the top three S&P 500 sectors last week, down 2.9%, 2.7% and 2.4%, respectively. Next week, we’ll get several important updates on the state of the US economy and hear from Fed Chairman Jerome Powell following the central bank’s decision. No club names will be announced, but earnings from homebuilder Lennar and corporate uniform supplier Cintas will shed more light on the economic and business backdrop as we head into next year. Don’t forget to mark your calendars: the December monthly meeting will be live on the website at noon ET on Wednesday. The big economic update of the Economic Week comes on Friday with the release of the November Personal Expenditure and Income report, which includes the Fed’s favorite measure of inflation, known as the PCE price index. Excluding food and energy prices, economists polled by Dow Jones expect a month-on-month increase of 0.2% and a 12-month increase of 2.9%. At the headline level, a monthly gain of 0.2% and an annual increase of 2.5% are expected. It’s unfortunate that these numbers won’t come out until after the Fed’s policy meeting on Wednesday, but again, we didn’t make the schedule. As mentioned, another cut of a quarter point is expected. However, he is starting to feel more confident about the coming year. Investors will be listening closely to Fed Chair Powell’s press conference to find out what monetary policy might look like in 2025; We certainly wouldn’t be surprised if Powell reiterated that the central bank is in no rush to cut borrowing costs on Wednesday. the decision is somewhat “hawkish cut”. On Thursday, sandwiched between these two events, we will receive the final update of the third quarter gross domestic product. Economists expect a 2.9% increase in GDP between July and September, according to Dow Jones. Tuesday’s November retail sales report may provide some insight into Friday’s personal spending reading. The Dow Jones estimate is a 0.4% gain for the month, excluding auto sales. Also on Tuesday we will receive the November capacity utilization and industrial production report, which looks at the state of the manufacturing, mining and electric and gas utilities industries. We’ll also get a trio of updates on the housing market, starting Wednesday morning with November housing starts and building permits, followed by the November home sales report on Thursday. Lennar, one of the nation’s largest homebuilders, reported Wednesday night, providing a real-time update on the state of the housing market. Lennar’s results and conference calls can be more informative than these high-level macroeconomic reports. More on Lenna in a moment. Earnings There are a few noteworthy companies outside of our portfolio that investors should keep an eye on. In fact, Lennar is one of them. Given how sticky housing inflation has been, we’re always looking for insights into this market. This time, we’re interested in what management has to say about consumer behavior after a strange few months for mortgage rates – despite the Fed’s tightening cycle in September, home-buying borrowing costs started to rise. In recent weeks, that upward trend has begun to reverse somewhat, although mortgage rates remain prohibitively high for many. Micron also reported after the close on Wednesday, giving investors a look at chip demand for data centers and consumer electronics such as personal computers. Micron makes memory chips for a variety of customers, including Nvidia’s Club. Micron’s comments on computers will also offer a read on the Club’s name Advanced Micro Devices. On Thursday morning, we hear from Cintas, which provides uniforms, cleaning products and first aid supplies to small and medium-sized businesses. The company’s exposure to so many industries makes it a barometer of business activity in various sectors of the economy. As Jim has said in the past, “You can’t have a recession if Cintas opens its doors.” Paychex, one of the nation’s largest payroll processors, is another company that announced before Thursday’s bell. Like Cintas, Paychex also focuses on small and medium-sized businesses. This makes it uniquely positioned to provide insight into the health of the labor market. Remember, the US is a consumption-driven economy. Low unemployment supports sustained purchasing power and is therefore critical to avoiding a recession. Late Thursday, we’ll report on Nike and FedEx, which can provide insight into the state of China’s economy, serving all economic sectors and consumer businesses across the country. This puts FedEx in a position to provide a high-level view of economic activity and business and consumer demand. Monday, December 16 There are no unannounced events. Tuesday, December 17 8:30 am ET: Retail Sales 9:15 am ET: Industrial Production and Capacity Utilization Before the Bell: Amentum (AMTM) After the Bell: Heico Corp. (HEI) Wednesday, December 18 8:30 am ET: Housing Starts and Building Permits 12:00 pm ET: Investing Club’s Monthly Meeting 2 pm ET: Federal Reserve Rate Decision Before the Bell: ABM Industries (ABM), General Mills (GIS) , Toro (TTC), Jabil (JBL) After the bell: Micron (MU), Lennar (LEN), MillerKnoll (MLKN), Steelcase (SCS), Worthington Steel (WS) Thursday, December 19 8:30am ET: Initial Jobless Claims 8:30am ET: Crude Domestic Price 10:00am ET: Existing Home Sales Before the Bell: Accenture (CAN), Cintas (CTAS), Darden (DRI ), FactSet (FDS), Conagra (CAG), Paychex (PAYX), CarMax (KMX). ) After the Bell: Nike (NKE), FedEx (FDX), BlackBerry (BB), Mission Produce (AVO), Scholastic (SCHL) Friday, Dec. 20 8:30 a.m. ET: Personal Spending and Income Before the Bell: Carnival ( CCL), Winnebago Industries (WGO) (Jim Cramer’s Charitable Trust is long AVGO, COST, NVDA, GOOGL and AMD). See the full list of stocks here.) 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Jerome Powell, chairman of the US Federal Reserve, at the Music Hall at Fair Park in Dallas, Texas, USA, on Thursday, November 14, 2024.
Shelby Tauber Bloomberg | Getty Images
The Federal Reserve will take center stage in the coming days as Wall Street tries to put a mixed week behind it.
