On tap next week: Two key inflation reports and 4 Club earnings releases. Here's what we're looking for

Published Sat, Aug 5 202310:00 AM EDT

All three major U.S. stock indices pulled back this week, with the S & P 500 closing down more than 2% and the Nasdaq Composite losing roughly 3%. Each average attempted to cut losses on Friday, helped by strong earnings from Club name Amazon (AMZN) and a slightly weaker-than-expected jobs report for July, before fizzling out in late-day trading. Nonfarm payrolls expanded by 187,000 last month, while the employment rate came down slightly, to 3.5%, the Labor Department said. The report suggests the Federal Reserve is succeeding, however gradually, in its efforts to cool the labor market and rein in inflation by raising interest rates. Other macroeconomic data this past week included ISM Manufacturing on Tuesday, the ADP Employment report on Wednesday, and a Factory Orders report and ISM Services release on Thursday. But the main driver behind this week's sluggish performance in equities markets was Fitch Ratings' downgrade of the United States' long-term foreign currency issuer default rating to AA+, from AAA. The agency cited "eroded confidence in fiscal management" by the U.S. government. Looking to next week, we'll be watching economic data and more second-quarter earnings. 1. Economic releases : The Labor Department releases its monthly consumer price index and producer price index on Thursday and Friday, respectively. We'll be look for signs of disinflation on an annual basis in both reports, especially in the core index, which strips out food and energy prices due to their volatility. In addition to the CPI's core index, we'll be honing in on the shelter index, which represents about a third of total CPI. Housing costs have been a thorn in the Fed's side, as a lack of supply has helped keep prices elevated. High rates are compounding still-elevated prices and, as a result, U.S. home prices are now at a 37-year low for affordability , according to Black Knight. Though we have seen the rate of inflation slow, as measured by the shelter index, it's still far too high, coming in at 7.8% for the 12-month period ended in June. The lower the print the better, as it could give the Fed the data it needs to forgo another interest-rate hike and signal to investors that rates may have peaked. That would be bullish for sentiment and a positive for equities through the end of the year. Meanwhile, the PPI is nearly at the 2% inflation rate the Fed targets, with the core index coming in at 2.6% in June. By contrast, the core CPI index was 4.8% in June on an annual basis. For that reason, we'd be content if the July figure doesn't indicate a resurgence of rising wholesale costs, which is a concern given a recent uptick in energy prices. 2. Earnings : As of Friday, 84% of S & P 500 companies had reported quarterly results for the three months ended in June. Of those that have reported, 79% reported an upside earnings surprise, while 65% reported better-than-expected revenue results. And we can expect earnings results to once again drive stock-market action next week. Club name Coterra Energy (CTRA) reports Monday after the bell, and our primary focus will be on free-cash-flow performance and returns to shareholders via dividends and buybacks. That said, maximizing free cash flow requires the company to realize the best prices, so we'll be keeping an eye on how effectively management has been hedging in this volatile oil-price environment. On Tuesday before the opening bell, Club holding Eli Lilly (LLY) reports. We'll be looking for signs of momentum around Mounjaro , the company's drug for diabetes and weight loss, along with any other opportunities management sees for the medication down the line. Any commentary on Alzheimer's drug donanemab would also be of interest. Finally, Club names Walt Disney (DIS) and Wynn Resorts (WYNN) will report on Wednesday after the closing bell. With Disney, it's all about the progress being made on management's $5.5 billion savings initiative, as well as what the strike in Hollywood means for both theatrical releases and the content pipeline on Disney+. We're also curious to hear more about management's plan to integrate Disney+ and Hulu content. As for Wynn Resorts, we'll be listening to hear about how demand is holding up at its Las Vegas and Boston properties, and how the Chinese reopening is playing out in the gambling hub of Macao. In preparation for these releases, be sure to check out our first-quarter earnings report card . Here's the full rundown of all the important domestic data in the week ahead: Monday, August 7 Before the bell: Tyson Foods (TSN), Viatris (VTRS), BioNTech (BNTX), Henry Schein (HSIC), Elanco (ELAN), KKR (KKR) After the bell: Coterra Energy (CTRA), Palantir (PLTR), Lucid (LCID), Skyworks (SWKS), Chegg (CHGG), Paramount (PARA), ONEOK (OKE), Beyond Meat (BYND), Celanese (CE), Compass (COMP) Tuesday, August 8 Before the bell: Eli Lilly (LLY), UPS (UPS), Datadog (DDOG), Barrick Gold (GOLD), Li Auto (LI), Capri (CPRI), Duke Energy (DUK), Under Armour (UAA), Restaurant Brands (QSR), TransDigm (TDG), Cellebrite (CLBT), Warner Music (WMG), Zoetis (ZTS), ADT (ADDT), Aramark (ARMK), GlobalFoundries (GFS), Fox Corp (FOXA), Veritiv (VRTV), Energizer (ENR), NRG Energy (NRG) After the bell: Rivian (RIVN), AMC (AMC), Upstart (UPST), Supermicro (SMCI), Twilio (TWLO), Celsius (CELH), Lyft (LYFT), Dutch Bros (BROS), Toast (TOST), Coupang (COUP), Axon (AXON), Bumble (BMBL), Akamai (AKAM), Take-Two (TTWO), Topgolf (MODG), Endeavor (EDR), Insulet (PODD), IAC (IAC) Wednesday, August 9 Before the bell: Roblox (RBLX), Sony (SONY), PENN (PENN), Wendy's (WEN), Brookfield Asset Management (BAM), GoodRx (GDRX), Brink's BCO), Valvoline (VVV) After the bell: Disney (DIS), Wynn Resorts (WYNN), Sonos (SONO), Illumina (ILMN), Plug Power (PLUG), Trade Desk (TTD) Thursday, August 10 8:30 a.m. ET: Consumer Price Index 8:30 a.m. ET: Initial jobless claims Before the bell: Alibaba (BABA), Novo Nordisk (NVO), CyberArk (CYBR), US Foods (USFD), Ralph Lauren (RL), Six Flags (SIX), YETI (YETI) After the bell: IonQ, (IONQ), Credicorp (BAP), News Corp (NWSA) Friday, August 11 8:30 a.m. Producer Price Index Before the bell: Air Canada (ACDVF) (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) 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Traders work on the floor of the New York Stock Exchange (NYSE) on August 02, 2023 in New York City.

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