S&P 500 futures fall slightly ahead of retail gains ahead of the Thanksgiving holiday

Traders on the NYSE floor, October 21, 2022.

Source: New York SE

S&P 500 futures fell slightly on Sunday night before another string of retail gains ushered in a shortened week for the Thanksgiving holiday.

Futures linked to the broad market index were down 0.1%. Dow Jones Industrial Average futures fell 38 points, or 0.1%. Nasdaq 100 futures traded at the zero line.

The major moving averages each recorded an up day but a down week in the previous trading session. The Dow rose nearly 200 points, or 0.6%. The S&P rose 0.5% and the Nasdaq Composite closed just 0.01% above the zero line.

Investors have pondered the strength of the recent bear market rally that started earlier in the month with October CPI and picked up some traction with last week’s wholesale prices. Traders were keen on news last week from Federal Reserve officials who were less than impressed with the numbers and reassessed their optimism on the possibility of inflation slowing.

Yardeni Research’s Ed Yardeni said he believes the Oct. 12 low is the bottom and the S&P 500 could rise to nearly 4,300 by the end of the year, he told CNBC on Friday night’s “Closing Bell: Overtime.” The reference index is currently at 3,965.34.

“What makes the big difference in the market is the resilience of the economy, that’s been spectacular,” he said. “Everyone has been debating whether we are going to have a soft landing or a hard landing – now there is no landing at all. The consumer has not understood the recession memo and continues to spend.”

Retail sales rose in October, but at the corporate level, Target reported slowing demand and Amazon said it would lay off 10,000 workers — despite Home Depot and Walmart reporting strong results.

“Despite what holiday spending may suggest, retail stocks tend to be in the top three in November, but in the bottom three in December and somewhere in the middle in January,” said Liz Young, SoFi’s chief investment strategist. said in a note this weekend.

“Seasonality has a place in market analysis and has some predictive power. But the power of the business cycle is stronger regardless of the time of year,” she added. “With 375 basis points of Fed rate hikes to date, an inverted yield curve, inflation spikes and commodity prices still part of the narrative, we can almost conclude that we are late in the business cycle.”

This week, a historically quiet week leading up to Thanksgiving, investors will be preoccupied with a different set of retail gains to digest ahead of the start of the post-holiday shopping season. Best Buy, Nordstrom, Dick’s Sporting Goods and Dollar Tree are among the companies on deck.

Investors will also get a barrage of economic reports, including durable goods, new home sales, jobless claims and consumer sentiment, as well as the release of minutes from the Federal Reserve’s last meeting.

The coming week is short. The market is closed on Thursday for Thanksgiving. On Friday, the stock market closes at 1:00 p.m. ET and the bond market closes at 2:00 p.m. ET.

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