🔥 A red hot stock market: The S&P 500 closed above 5,000 for the first time ever on Friday as the three major averages logged a positive week for the 13th time in the last 14 weeks.
With few economic catalysts in the past week, investors have been digesting a slew of corporate results that have come in better than expected. Recent commentary from Federal Reserve officials largely reiterating the need for more confidence in inflation's path downward hasn't prevented new record highs.
The week ahead will bring new challenges to the market rally, though, with a fresh reading on inflation and consumer spending highlighting the economic calendar. On the corporate side, about 15% of the S&P 500 is set to report earnings headlined by John Deere (DE), Coinbase (COIN), Airbnb (ABNB), and Shopify (SHOP).
🏷️ The CPI price check: Tuesday morning will bring investors the Consumer Price Index (CPI) for January. Wall Street expects an annual gain of 2.9% for headline CPI, which includes the price of food and energy, a noted decrease from the 3.4% headline number in December. Prices are set to rise 0.2% on a month-over-month basis, in line with December's rise.
On a "core" basis, which strips out the food and energy prices, inflation is expected have risen 3.7% year-over-year, a slowdown from the 3.9% increase seen in December. Monthly core price increases are expected to clock in at 0.3%, unchanged from the month prior.
"We expect more core goods deflation this month, mainly driven by weak used car prices," Morgan Stanley economist Diego Anzoategui wrote in a note to clients on Thursday.
🏥 Retail sales data showing a healthy consumer: A fresh reading of retail sales data Thursday is expected to show retail sales declined 0.2% in January from the prior month due to seasonal factors and disruptive winter storms.
Part of the soft-landing thesis that's taken over markets in the past few months has been consistent stronger-than-expected data on consumer spending. But this "soft" data shouldn't change this narrative.
"Sifting out the noise, however, the consumer looks healthy, with upside risks to spending from accelerating real wages," Bank of America US economist Michael Gapen wrote in a note to clients.
The real wages metric Gapen references, which is the wage Americans see after subtracting inflation from their wage growth, was recently listed in the Yahoo Finance Chartbook as a reason the US economy has skirted recession amid higher interest rates.
🚗 The last big auto check in of the quarter: Stellantis (STLA), the parent company of Chrysler and Fiat, is on deck to report Thursday, making it the last Big Three automaker to report earnings this cycle.
After Tesla's (TSLA) earnings report disappointed investors, traditional automakers Ford (F) and GM (GM) surprised to the upside.
Yahoo Finance's Pras Subramanian reports: While the United Auto Workers (UAW) strike that lingered into October will likely hit operating margins, Stellantis is expected to see revenue jump over 5% to 189.3 million euros, and adjusted net income to climb 9.7% year over year to 18.4 billion euros, per Bloomberg estimates.
Stellantis CEO Carlos Tavares was criticized in the past for not moving faster with the company’s EV transition; now he is looking prescient as demand for EVs has seemingly waned in recent months. Shares of fellow Big Three automakers Ford and GM have surged following strong earnings reports, as the two Michigan-based automakers’ traditional gas-powered businesses are projecting robust profits for 2024.
Investors will be looking for Stellantis to offer more of the same with an outlook that sees profit growth and limits EV capital expenditure outlays.
— Josh Schafer, Markets Reporter | 
