S&P 500 futures fall ahead of more retail earnings before the Thanksgiving holiday

Traders on the floor of the NYSE, October 21, 2022.

Source: NYSE

S&P 500 futures fell early Monday ahead of another batch of retail earnings to kick off a short week for the Thanksgiving holiday.

Futures tied with the broader market index were down 0.35%. Dow Jones industrial average futures were down 84 points, or 0.25%. Nasdaq 100 futures were 0.33% lower.

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

Investors are reflecting on the strength of the recent bear market rally, which began earlier in the month with October’s consumer price index reading and gained some steam with last week’s reading on wholesale prices. Traders were hung up on a message from Federal Reserve officials last week, who were less impressed by the data and reassessed their optimism around the prospect of slowing inflation.

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Yardeni Research’s Ed Yardeni said he thinks the Oct. 12 low was the low and the S&P 500 could get closer to 4,300 by the end of the year, he told CNBC on Friday night’s “Closing Bell: Overtime.” The benchmark index currently sits at 3,965.34.

“The big difference in the market is the resilience of the economy, it’s been fantastic,” he said. “Everybody’s debating whether we’re going to have a soft landing or a hard landing — meanwhile, there’s no landing at all. Consumers didn’t get the recession memo and they keep spending.”

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Retail sales rose in October, but at the corporate level Target reported sluggish demand and Amazon announced it would lay off 10,000 employees — although Home Depot and Walmart reported strong results.

“Retail stocks are in the top three in November, but in the bottom three for December and somewhere in the middle-of-the-pack in January,” Liz Young, SoFi chief investment strategist, said in a note this weekend, despite holiday season spending suggesting.

“Seasonality has a place in market analysis and has some predictive power. But the power of the economic cycle is strong, regardless of the time of year,” he added. “So far with 375 basis points of Fed rate hikes, an inverted yield curve, a spike in inflation, and commodity prices still part of the story, we can all conclude that we are late in the economic cycle.”

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This week, historically quiet ahead of Thanksgiving, investors will be busy with another batch of retail earnings to digest before the post-holiday shopping season begins. Best Buy, Nordstrom, Dick’s Sporting Goods and Dollar Tree are among the companies on deck.

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

The week ahead is short. The market will be closed Thursday for Thanksgiving. On Friday, stock exchanges will close at 1 p.m. ET and bond markets will close at 2 p.m. ET.

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