All three major U.S stock indices pulled back this week, as earnings season wound down and retail earnings painted a mixed picture of the state of the economy. The S & P 500 closed out the week down more than 2%, while the Nasdaq Composite lost 2.6% — with both averages tumbling for a third-consecutive week. The Dow Jones Industrial Average ended the week lower by 2.2%. A slate of quarterly results from the likes of Club name TJX Companies (TJX), Walmart (WMT) and Target (TGT) indicate that the consumer, though resilient, is becoming increasingly budget conscious . While U.S. consumers are focused on discretionary purchases such as clothing and apparel, buyers are looking for deals in order to have more expendable income to spend on services like travel, leisure and experiential entertainment. This more selective consumer likely has many investors debating whether the Federal Reserve is strangling the economy by raising interest rates too high in order to combat inflation. And given the strength we have seen in the market year-to-date until recently, many investors are now likely looking to book profits and raise cash. Add in heightened tensions between the U.S. and China — along with the historical precedent that August is generally a lackluster month for equities — and its understandable why the market has moved into a risk-off mode in recent weeks. While we, too, are monitoring cash levels and don’t intend to be overly aggressive in the market, we don’t think the recent pullback is sign of any greater threat on the horizon and are inclined to view this seasonal weakness as a buying opportunity . Looking to next week, we’ll be watching how shares of Club name Palo Alto Networks (PANW) open on Monday. The stock soared more than 11% in Friday’s after-hours trading. The leading cybersecurity company delivered a quarterly earnings beat , surprising investors who had worried that a Friday evening release might mean bad news. Palo Alto shares have been slumping recently after a competitor’s warning. Here are the economic numbers and the final round of second-quarter earnings we’ll also be studying. 1. Economic releases : The two main releases we’ll be focused on are the existing home sales report on Tuesday and that of new home sales on Wednesday. With mortgage rates hitting the highest level in over two decades this week, affordability remains a major impediment for the housing market. The affordability issue as it relates to listing prices is the result of too little supply in the market — so any information on the state of the supply-demand imbalance will be more instructive than the headline figures from these reports. Outside of housing, there will be a flash manufacturing managers’ index on Wednesday and durable goods reading on Thursday, both of which will provide insight into the state of manufacturing. While these releases are preliminary metrics, they are useful in gauging whether or not the Fed has overtightened, or if a rebound for the manufacturing sector is in the cards. 2. Earnings : Club name Foot Locker (FL) reports quarterly results Wednesday before the opening bell, while Club holding Nvidia (NVDA) releases after the close that same day. Wall Street isn’t expecting much from Foot Locker, with analysts forecasting a 96% drop in profit on an annual basis. That said, this is expected to be the trough, so investors should listen into the post-earnings conference call for any commentary from management on the company’s next steps. Though we don’t have high hopes for the reported results, we are very interested to hear from CEO Mary Dillon about how how her “Lace Up” turnaround plan is taking shape. Meanwhile, we expect Nvidia to deliver a solid quarter, as demand for the company’s artificial-intelligence chips continues to significantly outpace supply. But the real questions will be around the company’s guidance: Has demand sustained into the third quarter? What does management think about the potential for further restrictions on chip exports to China, and what does it means for sales longer term? And, if demand is holding up, can management secure enough supply to meet that demand? Outside of the portfolio, home-improvement-retailer Lowe’s (LOW) and homebuilder Toll Brothers (TOL) are both set to report earnings on Tuesday. Lowe’s could provide deeper insight into the how Americans are thinking about the housing market – are they looking to move, or settling on renovation given sky-high mortgage rates? Toll Brothers’ results could shed some light on housing supply and the affordability issue going forward. For reference, be sure to review our first-quarter earnings report card next week. Here’s the full rundown of all the important domestic data in the week ahead: Monday, Aug. 21 Before the bell: After the bell: Zoom Video (ZM), Lufax Holding (LU), Fabrinet (FN) Tuesday, Aug. 22 10:00 a.m. ET: Existing home sales Before the bell: Baidu (BIDU), Macy’s (M), Medtronic (MDT), Lowe’s (LOW), Canadian Solr (CSIQ), Dick’s Sporting Goods (DKS), BJ’s Wholesale (BJ), Coty (COTY) After the bell: Toll Brothers (TOL), La-Z-Boy (LZB), Urban Outfitters (URBN) Wednesday, Aug. 23 9:45 a.m. ET: Flash manufacturing PMI 10:00 a.m. ET: New home sales Before the bell: Foot Locker (FL), Peloton (PTON), Advance Auto Parts (AAP), Kohl’s (KSS), Analog Devices (ADI), Williams-Sonoma (WSM), Dycom (DY), Bath & Body Works (BBWI), Abercrombie & Fitch (ANF) After the bell: Nvidia (NVDA), Snowflake (SNOW), Splunk (SPLK), Autodesk (ADSK), NetApp (NTAP) Thursday, Aug. 24 8:30 a.m. ET: Initial jobless claims 8:30 a.m. ET: Durable goods orders Before the bell: Burlington (BURL), Dollar Tree (DLTR), TD Bank (TD), Royal Bank of Canada (RY), Petco (WOOF), NetEase (NTES) After the bell: Marvell Technology (MRVL), Affirm (AFRM), ULTA Beauty (ULTA), Intuit (INTU), Workday (WDAY), Gap (GPS), Nordstrom (JWN) (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Shoppers carry retail bags along the Magnificent Mile shopping district in Chicago, Illinois, on Tuesday, Aug. 15, 2023.
Kelter Davis | Bloomberg | Getty Images
All three major U.S stock indices pulled back this week, as earnings season wound down and retail earnings painted a mixed picture of the state of the economy.
The S&P 500 closed out the week down more than 2%, while the Nasdaq Composite lost 2.6% — with both averages tumbling for a third-consecutive week. The Dow Jones Industrial Average ended the week lower by 2.2%.
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