What to Expect in the Markets Next Week

Coming back from the Thanksgiving holiday and Black Friday sales, U.S. markets will resume a full schedule this week, as market watchers will see the latest inflation print, while a handful of notable firms will report earnings. 

The week’s most watched event will likely be the latest release of inflation data, as the personal consumption expenditures (PCE) index will provide a look at whether the Federal Reserve’s campaign to fight inflation through interest rate hikes is working. It will likely help inform the Federal Open Market Committee (FOMC) ahead of its upcoming meeting on Dec. 12-13, where it will review interest rates levels.

Investors will also get reports on new home sales, September’s home-price index, October’s new home and pending home sales, and consumer confidence in November. On Wednesday, the first revisions to the third-quarter U.S. Gross Domestic Product will be released. 

The week will include a string of tech, finance, and retail earnings, led by customer relations management firm Salesforce on Wednesday, while tax services provider Intuit, cloud enterprise management firm Workday, cybersecurity provider Crowdstrike, and retailers Dollar Tree and Five Below are also set to report.

Week of Nov. 27:

Monday, Nov. 27

• Zscaler (ZS) earnings. 
• New home sales (October)

Tuesday, Nov. 28

• Intuit (INTU), Workday (WDAY), CrowdStrike (CRWD), and Splunk (SPLK) report earnings. 
• S&P Case-Shiller Home Price Index (September)
• Consumer confidence (November)

Wednesday, Nov. 29

• Salesforce (CRM), Synopsys (SNPS), Snowflake (SNOW), Dollar Tree (DLTR), Hormel Foods Corporation (HRL), Okta (OKTA), Pure Storage (PSTG) and Five Below (FIVE) release earnings.
• Q3 U.S. Gross Domestic Product (GDP) (first revision)
• Advanced U.S. trade balance in goods (October)
• Advanced wholesale inventories (October)
• Advance retail inventories (October)
• Federal Reserve Beige Book 

Thursday, Nov. 30

• Dell Technologies (DELL), Marvell Technology (MRVL), Kroger Company (KR), Ulta Beauty (ULTA), Royal Bank Of Canada (RY), TD Bank (TD), and CIBC (CM) release earnings.
• Initial jobless claims (week ending Nov. 25)
• Personal Consumption Expenditures (PCE) Index (October)
• Pending home sales (October)

Friday, Dec. 1

• Genesco (GCO) releases earnings. 
• ISM manufacturing (November)
• Construction spending (October)
• Auto sales (November)

Markets Watching PCE for Inflation Cues

The Personal Consumption Expenditure (PCE) index, a preferred inflation metric of the Fed, will provide the latest look at prices to markets that are eager to see inflation fall.

The PCE reading comes after another inflation indicator—the Consumer Price Index (CPI)—came in lower-than-expected at 3.2% for October, a sharp drop from the 3.7% rate from September.

Thursday’s release of the PCE index will help show if prices for consumers will continue to drop and the Fed will be closely looking at the data in the report ahead of the Federal Open Market Committee meeting on Dec. 12-13. The next CPI report will come out on Dec. 12.

The Fed has raised interest rates to 5.25% to 5.5% in an effort to tame prices as they surged in summer 2022, when prices were on average 9% higher than the year before. The Fed’s target inflation rate is 2%

After it raised interest rates to a 22-year high over several consecutive meetings, inflation rates have been coming down, with the PCE coming in at 3.4% in September, its third straight month at that level.

Despite the drop, consumers have expressed fears that inflation will persist, and even worsen in the coming year.

Salesforce Earnings: A Glimpse Into AI Progress?

Salesforce’s earnings on Thursday will show how the company is utilizing artificial intelligence (AI) tools to fuel growth. The company doubled down on attracting AI talent when its CEO Marc Benioff offered employees at OpenAI a job at Salesforce following the then-outster of CEO Sam Altman.

The customer relationship management firm is expected to post 11% sales growth this year, according to analyst estimates compiled by Visible Alpha.

Investors will be looking to see if cost cutting measures at the firm will continue to boost its results. Salesforce is coming off a second-quarter where it reported an 11% jump in revenue to $8.6 billion, helping fuel a net income of $1.27 billion for the quarter.  

In its latest earnings report, the software company raised its full-year outlook to earnings per share of $8.04 to $8.06, up from its previous guidance of $7.41 to $7.43 earnings per share. It also raised its full-year revenue guidance up marginally to $34.7 billion to $34.8 billion. In March, the company announced it was stepping up its stock buyback program.