S&P 500 futures fall slightly ahead of Thanksgiving holiday ahead of more retail sales

S&P 500 futures fall slightly ahead of Thanksgiving holiday ahead of more retail sales
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Traders on the NYSE floor, Oct. 21, 2022.

Source: NYSE

S&P 500 futures were slightly lower on Sunday evening ahead of another retail earnings party to start the week shortened by the Thanksgiving holiday.

Futures tied to the broad market index were down 0.1%. Dow Jones Industrial Average futures fell 38 points, or 0.1%. Nasdaq 100 futures moved in a straight line.

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

Investors are taking note of the strength of the recent bear market rally, which began earlier in the month with the October consumer price index reading and picked up some steam last week with the wholesale price reading. Last week, traders closed in on messages from Federal Reserve officials who were less impressed by the numbers and reassessed their optimism around the prospect of slowing inflation.

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

“The big difference in the market is the resilience of the economy, which has been fantastic,” he said. “Everybody’s debating whether we’re going to have a soft recession or a hard recession — meanwhile, there’s no recession. The consumer hasn’t gotten the hang of the recession and continues to spend.”

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

“Despite what holiday season spending might suggest, retail stocks are in the top three for November, the bottom three for December and the middle of the pack for January,” Liz Young, chief investment strategist at SoFi, said in a note this weekend.

“Season has a place in market analysis and has some predictive power. But regardless of the time of year, the power of the economic cycle is stronger,” he added. “The Fed’s 375 basis points of rate hikes so far, the inverted yield curve, jumps in inflation and commodity prices are still part of the narrative, but we can all conclude that we are late in the economic cycle.”

In this historically quiet week leading up to Thanksgiving, investors will have another batch of retail earnings to digest before the post-holiday shopping season kicks off. Best Buy, Nordstrom, Dick’s Sporting Goods and Dollar Tree are among the companies on board.

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

Next week it is short. The market will be closed Thursday for Thanksgiving. Stocks will close at 1:00 PM ET on Friday and the bond market will close at 2:00 PM ET.

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