The latest reports on US retail sales as well as earnings from Walmart and Macy’s will form a key focus in the coming days.
Walmart is set to report its latest results on Thursday following last week’s US$16 billion deal to buy India’s Flipkart.
In a public filing on Saturday, the world’s largest retailer said it may take Flipkart public in as early as four years. Minority investors holding 60 percent of Flipkart’s shares “acting together, may require Flipkart to effect an initial public offering” four years after the close of the Walmart-Flipkart transaction, it said.
Other major US retailers set to post their latest results this week include Nordstrom, JC Penney and Home Depot.
Investors will also eye April retail sales data, due on Tuesday, to help gauge the possibility for an accelerated path of Federal Reserve interest rate increases this year.
“Although the tone of the recent survey evidence has been a bit softer, we expect the April retail sales report to show that, after a disappointing start to the year, consumption growth is set to rebound,” according to Capital Economics in a note on Friday.
Other US economic data set to be released include reports on the Empire State manufacturing survey, business inventories, and housing market index, due Tuesday; housing starts, industrial production, and Atlanta Fed business inflation expectations, due Wednesday; weekly jobless claims, Philadelphia Fed business outlook survey, e-commerce retail sales, and leading indicators, due Thursday.
With bets the Fed is on track to hike rates at its next policy meeting in June, investors will closely watch policy makers scheduled to speak this week. They include Loretta Mester and James Bullard today, John Williams on Tuesday, Raphael Bostic on Wednesday, and Neel Kashkari on Thursday.
In a speech last Friday, St Louis Fed President James Bullard “outlined five reasons for caution in raising the policy rate further based on current macroeconomic conditions.”
Wall Street has been cautious too, even amid better-than-expected corporate earnings. The Standard & Poor’s 500 Index is trading at 16 times expected earnings, its lowest multiple in two years, Reuters reported.
“We have very strong fundamentals from an earnings perspective and valuations are looking a bit more reasonable than they were late last year,” Bill Northey, senior vice president at US Bank Wealth Management, told Reuters.
Solid earnings helped lift Wall St for the week. The Dow Jones Industrial Average rallied 2.3 percent, the S&P 500 climbed 2.4 percent, while the Nasdaq Composite Index advanced 2.7 percent.
On Friday, the Dow rose 0.4 percent, bolstered by gains in Merck and other healthcare stocks, while the S&P 500 added 0.2 percent. However, the Nasdaq inched 0.03 percent lower.
Caution remains a factor, however.
"We have a historically pricey market at a time when costs are rising — from wages to borrowing to inputs and service — all while the supply of debt is increasing and a major buyer, the Fed, is no longer adding to its balance sheet, but rather reducing it," Lenore Hawkins, chief macro strategist at Telematica Research, said in a note on Friday.
"We are in the later stages of the economic cycle and the bull market, which means this is a great time to put together your shopping list of those companies benefiting from major thematic tailwinds along with target entry prices so that you are ready to act when opportunities present themselves," according to Hawkins.
In Europe, stocks ended mixed as well on Friday, with the UK’s FTSE 100 Index posted a 0.3 percent gain from the previous day’s close, while Germany’s DAX Index slid 0.2 percent and France’s CAC 40 Index fell 0.1 percent.
Here, investors will eye reports on eurozone gross domestic product and industrial production, as well as ZEW economic sentiment, due Tuesday, eurozone consumer price index, due Wednesday, as well as eurozone current account and trade balance, due Friday.