What to Know in Markets this week

This week, the state’s inflation on fresh data, as the Federal Reserve hastens to bring down the fast-rising prices. Quarterly earnings season will also continue, with a bevy of expected stock index component reporting results.

The Bureau of Labor Statistics’ April Consumer Price Index (CPI), due out this week, is the most-anticipated economic report this week. The headline index is expected to decelerate on a two-month-over-month and year-over-year basis, offering a tentative sign that the rate may rise in price.

Specifically, consensus economists are looking for the broadest measure of CPI to increase 8.1% in April, down from March’s 8.5% advance. On that one-month-over-month basis, the headline CPI is expected to rise by just 0.2%, with March’s 1.2% rise sharply.

Excluding volatile food and energy prices, the core measure of CPI is expected to decelerate to a 6.0% annual increase. That would be the slowest rate since December, following March’s 6.5% year-over-year rise in core CPI.

A moderation in energy prices is likely to contribute to the deceleration in headline CPI. Prices for crude oil, gas, and other energy commodities soared in late February and March following Russia’s initial invasion of Ukraine. While these geopolitical concerns are related to energy and other supply chain disruptions, these events have temporarily pared back from the appreciation of the rate.

“After Enhancing Headline March, Energy Prices Are Set to Be Absolutable Seasonal Factors with Coupled Retail Gasoline Prices Coupled with a Decline,” Bank of America global economist Ethan Harris wrote in a note Friday. “In the meantime, food prices should remain hot. If our forecast proves correct, yoy [year-over-year] Headline inflation would drop 7.9% to 8.5%, confirming March as the peak for yoy inflation. “

Within core inflation, however, some weighted categories are still expected to come in hot, keeping inflation elevated, if off peak rates. Rents in particular are expected to keep rising, reflecting heightened demand for rising home prices and mortgage rates on many home-buyers.

“Food, energy, and shelter are worth the categories, but shelter is of particular concern,” Greg McBride, chief financial analyst at BankRate, said in an email Friday. Many household budgets – and with double-digit increases in rents kicking in, this even puts the household budget on a food and energy cost level. ”

Most importantly, even if inflation rates were to come down, the prices would still be climbing at the same time as the pre-pandemic trends and the Federal Reserve’s targets for the US economy. The central bank last week unleashed its first 50 basis-point interest rate hike since the beginning of the 2000s, and some of the earliest moves were to try and address some of the demand-side factors keeping prices high.

A worker walks past a wholesale market May 4, 2022, in Washington, DC.  - The Federal Reserve on Wednesday raised the benchmark lending rate by four percentage points to a quarterly percentage point.  (Photo by Brendan Smialowski / AFP) (Photo by BRENDAN SMIALOWSKI / AFP via Getty Images)

A worker walks past a wholesale market May 4, 2022, in Washington, DC (Photo by BRENDAN SMIALOWSKI / AFP via Getty Images)

The latest inflation reports will show how far the Fed still has to go to get their inflation rates back down to their 2% targets.

The Fed has also telegraphed its main priority right now to bring down inflation, even if it means sacrificing some economic growth. Investors are looking to see if the Fed can balance its objective of addressing inflation while still avoiding a significant economic downturn.

“I think right now investors have some kind of weigh-in effect, which is basically a soft landing, where the Fed can get into a recession into the economy without driving under inflation, and a hard landing, where the Fed has “Over-tighten and push growth into negative territory,” Robert Dent, Nomura vice president and US economist, told Yahoo Finance Live on Friday.

“I also think part of what’s going on, the markets may be focused on Chair Powell’s comments on Wednesday’s 75-point hikes and the broader point-of-meeting, which was the Fed. in a mode that [they will do] Whatever it takes, under inflation, I think they are prepared for the hike rates to a very constrictive level, ”he added.

Disney earnings

This week, earnings season will roll out with another busy schedule of reports slated for release.

Disney (DIS), a member of the Dow Jones Industrial Average, will be one of the companies slated to report results. Its diversified businesses, including its theme parks, movie studios and streaming services, have both a company and a partial member of both stay-at-home and reopening trades.

But this earnings season, Disney’s streaming business will be Netflix’s disappointing report last month. In that print, Netflix unexpectedly posted its first decline in subscriber growth in a decade, and said it expected to lose another 2 million users in its current quarter.

People visit Magic Kingdom Park at Walt Disney World Resort in Lake Buena Vista, Florida on Friday, April 22, 2022. (AP Photo / Ted Shaffrey)

People visit Magic Kingdom Park at Walt Disney World Resort in Lake Buena Vista, Florida on Friday, April 22, 2022. (AP Photo / Ted Shaffrey)

Netflix attributes its subscriber attrition to a combination of competition, saturation in its major North American market, password-sharing and, to a lesser extent, its exit from Russia following the country’s invasion of Ukraine. While Disney + didn’t officially launch in Russia, Disney did announce in March that it would do all the business in the country as well, including the release of the new movies.

Consumer analysts are also looking for a slowdown subscribers for Disney’s flagship Disney + streaming service. According to Bloomberg estimates, Wall Street expects Disney + subscribers to grow by about 4.2 million for the company’s fiscal second quarter. This would bring total subscribers to about 134.1 million. Subscribers had the same period last year with risen by 8.7 million, and in the previous quarter, rose by 11.7 million.

But while Disney + will likely see a slowdown in growth, Disney’s parks, experiences and consumer products business division is expected to ramp up further. Analysts are looking for the unit to bring in $ 1.61 billion of operating profit on revenue of $ 6.1 billion. In the same quarter last year, the theme parks unit had posted an operating loss of virus-related restrictions on consumer mobility.

Disney is expected to report its adjusted earnings per share of $ 1.18 on revenue of $ 20.12 billion for its fiscal second quarter. Disney shares have fallen nearly 30% year-to-date, underperforming against the S&P 500’s more than 13% drop during that period.

Economic calendar

  • Monday: Wholesale inventories, month-over-month, March final (2.3% expected, 2.3% in prior print); Wholesale trade sales, month-over-month, March (1.8% expected, 1.7% in prior print)

  • Tuesday: NFIB Small Business Optimism Index, April (92.9 expected, 93.2 in prior print)

  • Wednesday: MBA mortgage applications, week-end May 6 (2.5% prior week), Consumer Price Index, month-over-month, April (0.2% expected, 1.2% in March); Consumer Price Index excluding food and energy, month-over-month, April (0.4% expected, 0.3% in March); Consumer Price Index, year-over-year (8.1% expected, 8.5% in March); Consumer Price Index excluding food and energy, year-over-year, April (6.0% expected, 6.5% in March); Monthly Budget Statement, April ($ 220.0 billion expected, – $ 192.7 billion in March)

  • Thursday: Producer Price Index, month-over-month, April (0.5% expected, 1.4% in March); Producer Price Index excluding food and energy, month-over-month, April (0.6% expected, 1.0% in March); Producer Price Index excluding food and energy, year-over-year, April (8.9% expected, 9.2% in March); Initial jobless claims, week ended May 7 (190,000 expected, 200,000 prior week); Continuing claims, week-ending April 30 (1.384 million in advance)

  • Friday: Import Price Index, month-over-month, April (0.7% expected, 2.6% in March); Import Price Index, year-over-year, April (1.2% expected, 1.1% in March); Export Price Index, month-over-month, April (0.7% expected, 4.5% in March); Export Price Index, year-over-year, April (18.8% in March); University of Michigan sentiment, May preliminary (64.0 expected, 65.2 in April)

Earnings calendar

Monday

Before market open: Coty Inc. (COTY), Blue Apron (APRN), Duke Energy Corp. (DUK), Palantir Technologies (PLTR), Tyson Foods (TSN)

After market close: Vroom (VRM), Simon Property Group (SPG), Lemonade Inc. (LMND), Novavax (NVAX), AMC Entertainment (AMC), Plug Power (PLUG), Zynga (ZNGA)

Tuesday

Before market open: Hyatt Hotels (H), Warner Music Group (WMG), Peloton (PTON), Norwegian Cruise Line Holdings (NCLH), Planet Fitness (PLNT)

After market close: Roblox (RBLX), Occidental Petroleum (OXY), Coinbase (COIN), Sofi Technologies (SOFI), Allbirds (BIRD), Rocket Cos. (RKT), Wynn Resorts (WYNN), Electronic Arts (EA)

Wednesday

Before market open: Yeti Holdings (YETI), Olaplex (OLPX), Krispy Kreme (DNUT)

After market close: Disney (DIS), Rivian Automotive (RIVN), Bumble (BMBL), Sonos Inc. (SONO), Beyond Meat (BYND), Dutch Bros. (BROS)

Thursday

Before market open: WeWork (WE), Six Flags Entertainment (SIX)

After market close: Affirm (AFRM), Figs Inc. (FIGS) and Toast Inc. (TOST)

Friday

No Notable Reports Scheduled Release

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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