Investors look to next week's key inflation data after rally in stocks stumbles

Published Fri, Jun 23 20234:22 PM EDT

The mega-cap-driven rally finally hit a wall this week. Investor fears of a U.S. recession seemed to flare back up after Federal Reserve Chairman Jerome Powell told a Senate panel on Wednesday that inflation remains too high and more interest-rate hikes are likely on the way. The comments came just a week after the central bank chose to leave rates unchanged for the first time since it started raising in March 2020. All three major U.S. stock indices ended multiweek rallies, with the tech-heavy Nasdaq Composite — which has led the broader market all year — breaking an eight-week winning streak. The Dow Jones Industrial Average , the S & P 500 and the Nasdaq lost more than 1% each for this holiday-shortened week. Still, Jim Cramer said Friday that he's not yet ready to aggressively put to work the cash we raised this month when the stock market was in deep overbought territory. "I don't necessarily think it's time to buy yet," he said on Friday's Morning Meeting. This coming week will feature some key inflation data to keep an eye on. The third reading on first-quarter gross domestic product on Thursday and the personal spending and income report on Friday will provide more insight on the Fed's battle with inflation. The spending report includes the core PCE price index, the central bank's preferred inflation metric. In the portfolio, Constellation Brands (STZ) will report quarterly results next Friday before the opening bell. Quick plug for our latest screen: While artificial intelligence has been the dominant stock market narrative so far this year, two of the most-loved Club stocks on Wall Street aren't stereotypical AI plays. As for the relatively data-light week that was. On Tuesday, the May housing starts report was released, coming in much stronger than expected, at a 1.63 million seasonally adjusted annual rate (SAAR), versus 1.39 million SAAR expected. Building permits were also above expectations at a1.49 million SAAR versus 1.43 million SAAR expected. On Thursday, initial jobless claims came in at 264,000 for the week ended June 17, in line with last week, which was the highest since October 2021. Meanwhile, existing home sales edged up 0.2% in May, to a SAAR of 4.3 million, slightly above the consensus estimate of 4.25 million. And on Friday, manufacturing activity in the U.S. was shown to have slowed more than expected in June, according to an S & P flash purchasing managers index reading. It was the lowest reading in six months. There were no trades in the portfolio this week. Here's the full rundown of all the important domestic data in the week ahead: Monday, June 26 Before the bell: Carnival Corp (CCL) Tuesday, June 27 8:30 a.m. ET: Durable goods orders 10 a.m. ET: New home sales Before the bell: Walgreens Boots Alliance (WBA) After the bell: Jefferies (JEF) Wednesday, June 28 Before the bell: General Mills (GIS) After the bell: Micron Technology (MU), HB Fuller (FUL) Thursday, June 29 8:30 a.m. ET: Weekly initial jobless claims 8:30 a.m. ET: Gross domestic price index 10 a.m. ET: Pending home sales Before the bell: Rite Aid (RAD), McCormick & Co (MKC), Paychex (PAYX), Acuity Brands (AYI) After the bell: Nike (NKE) Friday, June 30 8:30 a.m. ET: Personal spending and income Before the bell: Constellation Brands (STZ) (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

People walk along Wall Street outside the New York Stock Exchange, May 3, 2023.

Spencer Platt | Getty Images

The mega-cap-driven rally finally hit a wall this week.

Investor fears of a U.S. recession seemed to flare back up after Federal Reserve Chairman Jerome Powell told a Senate panel on Wednesday that inflation remains too high and more interest-rate hikes are likely on the way. The comments came just a week after the central bank chose to leave rates unchanged for the first time since it started raising in March 2020.