NEW YORK – 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. Meanwhile, commentary from Federal Reserve officials largely reiterated the central bank’s stance that more confidence in inflation’s path downward is needed.
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, Coinbase, Airbnb, and Shopify.
Tuesday will bring investors the Consumer Price Index (CPI) for January. Wall Street expects an annual gain of 2.9% for headline CPI, including the price of food and energy, a noted decrease from the 3.4% headline number in December. On a “core” basis, which strips out the food and energy prices, inflation is expected to have risen 3.7% year-over-year, a slowdown from the 3.9% increase seen in December.
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. A fresh reading on that trend is set to greet investors on Thursday with the January retail sales report. Economists expect retail sales to have declined 0.2% in January from the prior month.
After Tesla’s earnings report disappointed investors, traditional automakers Ford and GM surprised to the upside. Stellantis, 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.
Broadly earnings have been coming in increasingly positive, with the benchmark index on pace to report its second straight quarter of earnings growth. And, notably, analysts see earnings growth continuing throughout the next two years.
As investors are focusing less on when the Fed will start to cut rates, many companies outside of the large tech stocks driving the market action have been experiencing strong earnings growth, leading to continued outperformance in US stocks.
The week ahead will also bring economic data and earnings reports from companies like Avis Budget Group, Coca-Cola, and Airbnb, signaling a busy and eventful week for markets.