The stock market’s rally after the October inflation report will be tested next week, as investors watch the earnings of several major retailers and a host of Federal Reserve speakers. . But the key event is the market itself and whether it can turn an accelerated move higher into a longer-lasting rally to lift stocks later in the year. The major averages were higher again on Friday after a lower-than-expected consumer price index on Thursday triggered the best day for stocks in two years. October CPI rose 7.7% from a year ago, lower than the 7.9% expected. Stocks ended the week with strong gains on Friday afternoon. The tech sector was up 10% for the week. The Nasdaq Composite is ahead of the other indexes and is up more than 8% for the week. This week, bond yields also fell from all-time highs and plummeted, paving the way for tech and growth stocks to rally. “The CPI was better than expected, the elections went with a bit of a stalemate, earnings not a disaster,” said Art Hogan, director of market strategy at B. Riley Financial. “That just suggests there could be support for stocks and a favorable calendar. The midterm election cycle has a perfect track record of getting better over the next six months.” Market experts will continue to watch for any spillover effects from the crypto sell-off, following the massive boom in crypto exchange FTX. FTX filed for bankruptcy on Friday. “There is a correlation between crypto regulation and risky assets… The FTX write-off is not the last we hear about it,” Hogan said. “There may be a connection with other players, but it’s hard to know.” See What’s Expected Earnings from Walmart and Home Depot Tuesday, Other retailers, like Target and Macy’s also reported that week. Those chain stores will provide a glimpse into how consumers deal with higher interest rates and inflation. Another glimpse into consumer behavior will come when the Census Bureau releases its October retail sales report, scheduled for Wednesday. According to Dow Jones, retail sales are expected to grow 1.2%, up from last month’s unchanged result. Property data will also be released, with housing starting on Thursday and existing home sales on Friday. Both are expected to be weaker as rising mortgage rates take their toll on the sector. The Empire State manufacturing survey is released on Tuesday and the Philadelphia Fed manufacturing survey is released on Thursday. “I’ll definitely be watching retail sales and we’ll get the first industry numbers in November with the New York and Philly Fed,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “For me, those are the most relevant and then it is technically possible to see if there are any further moves on bonds and if the Treasury move has more impact. to it or not.” Geopolitically, any progress from Monday’s meeting in Indonesia between President Joe Biden and Chinese President Xi Jinping could be positive for market sentiment. “I understand the anger with China, but it’s not in anyone’s interest to go head-to-head with the second-largest economy. If anything can calm the mood that would be a good thing,” Boockvar said. Interest Rate Decline Investors will also be watching closely to see if the decline in interest rates hikes in the Treasury market continues over the next week. The closely watched benchmark 10-year yield ended Thursday at 3.81%, after falling more than 30 basis points following the CPI report. [A basis point equals 0.01 of a percentage point]. The cash bond market was closed on Friday for Veterans Day. “Is it a relief rally? People will be much more comfortable with 10-year yields below 4% versus above 4%,” Boockvar said. The 10-year term is key because it affects mortgage rates and many consumer and business loans. Falling 10-year yields, sending prices divergent, also helped fuel a strong rally in tech and growth names. Those highly valued stocks, which are valued based on future earnings, benefit the most from low rates and cheap money. The yield test could come in the first days of next week. Action on equities will be crucial, as market pros watch to see if the rally stabilizes or is derailed by the parade of Fed speakers. They include Fed Vice President Lael Brainard, New York Fed President John Williams and Minneapolis Fed President Neel Kashkari. “Everybody in the Fed is a hawk,” Hogan said. “I think the market has begun to pay more and more attention to the growing chorus of moderate hawkish sellers.” Hogan said that group includes Bullard, Brainard and San Francisco Fed President Mary Daly. “I think that group will grow next week,” he said. Hogan said Fed officials could send the message that the central bank is slowing the pace of rate hikes but will continue to keep rates high. The Fed announced it could raise another 50 basis points shortly after its December meeting, following four 75 basis points hikes. The message would be “let’s take it slow and see if that makes any difference,” Hogan said. “It is a well-known fact that monetary policy has a long lag and is subject to change.” Paul Christopher, head of global market strategy at Wells Fargo Investment Institute, said the market may be on its own in a bullish bias relative to the inflation report. “The CPI beats two ticks. What if it misses two ticks next month?” he say. Christopher said the Fed will eventually stop raising rates but not cutting, and stocks will face even more challenges this year. “I think the market will probably re-evaluate itself after its euphoria… You still have to get through another inflation report and another Fed meeting,” he said. “Inflation is still quite evident at the service level,” he said. “…We think illiquidity is what happens next.” Technically speaking There is a heated debate in the market as to whether Thursday’s rally is the start of a year-end bull run, as the market was mostly positive in the fourth quarter. of the midterm election years. Many strategists are calling the move higher a bear market rally and some predict it will hit December while others say it could continue into the new year. “Thursday’s rise surpassed what the options market expected in terms of post-CPI volatility. Stocks, Treasuries and currencies all showed some of the biggest volatility seen in years. [The S & P 500’s] Mark Newton, Fundstrat’s head of technical strategy, writes above the late-October highs that pose a big drop for the time being. on whether the ‘low’ has anything to do with whether Technology will really bottom with Treasuries. I tend to say no to both values,” Newton wrote in a note. Newton said he expects the stock to continue trending higher now and 4,100 on the S&P 500 as resistance. strong.” If it was reached early December, it would be considered an area where [the S & P 500] should stop and come back in 2023,” he noted.For short-term investors, he advises them to stay bullish unless 3,859 is broken and then track 3,700 below it. Newton points out that peaks in August, September and October have reached mid-month, while June and July see mid-month lows, he said, suggesting there could be a short-term tops led to weakness on Nov. 22nd and 23rd. “I think the sell-off at that point was buyable, and it would only be necessary to actually turn down again. if 3,700 is broken, this may not happen until next year,” he added 6:30 p.m. New York Fed President John Williams Tuesday earnings: Walmart, Home Depot, Vodafone, Krispy Kreme , Tencent Music, Valvoline, Energizer, Aramark, Advance Auto Parts 8:30 am PPI 8:30 am Empire State Production 9:00 am Philadelphia Fed President Patrick Harker 9:00 am Fed Governor Lisa Co ok 10:00 am Vice President Fed chief overseeing Michael Barr at Senate Bank Wednesday Income: Target, Cisco, Lowe’s, Tencent Holdings, Shoe Carnival, TX, Grab Holdings, NVIDIA, Copa Holdings, Bath and Body Works, Sonos 8:30 a.m. Retail Sales 8:30 a.m. Import prices 8:30 a.m. Business Leadership Survey 9:15 a.m. Industrial Production 9:50 a.m. New York Fed Williams Index 10:00 a.m. Fed Governor Barr at the Commission House Financial Services Committee 10:00 a.m. Corporate Inventory 10:00 a.m. NAHB Survey 2:35 p.m. Fed Governor Christopher Waller 4:00 p.m. TIC Data Thursday Earnings: Applied Materials , Alibaba, Macy’s, Siemens, Burbery, BJ’s Wholesale, Kohl’s, NetEase, Pershing Square, Weibo, Gap, Palo Alto Networks, Ross Stores, Post Holdings 7:30 a.m. Atlanta Fed President Raphael Bostic 8:00 a.m. St. Louis James Bullard 8:30 a.m. Initial Requests 8:30 a.m. Housing starts 8:30 a.m. Philadelphia Fed manufacturing 9:15 a.m. Fed Governor Michelle Bowman 9:40 a.m. Cleveland Fed President Loretta Mester 10:40 a.m. Fed Governor Philip Jefferson and Minneapolis Fed President Neel Kashkari 1:45 p.m. Kashkari of the Minneapolis Fed 6:15 p.m. Chicago Fed President Charles Evans, Fed Chair Jerome Powell, San Francisco Fed President Mary Daly and Williams of the New York Fed at the Evans anniversary event. No policy comments are expected. Earnings Friday: JD.com, Foot Locker, Buckle 8:40 a.m. Boston Fed President Susan Collins 10:00 a.m. Existing Home Sales 10:00 a.m. Top Index 10:00 a.m. Consumer Service Survey precious
