Week Ahead on Wall Street: The Final Word

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The final and perhaps most crucial pieces of the interest rate puzzle fall into place this week. A full slate of inflation data is scheduled for release, and the results are expected to be key to the Federal Reserve’s interest rate decision next week.

The Producer Price Index (PPI) comes on Wednesday, followed by the Consumer Price Index (CPI) on Thursday. CPI looks at the prices consumers pay for a basket of goods and services, while PPI measures wholesale prices, offering a look at inflation pressures earlier in the pipeline.

The readings are important as the Fed decides what to do with its benchmark interest rate: The central bank, charged with promoting maximum employment and stable prices, raises the rate to help fight inflation and lowers it to encourage borrowing and stimulate hiring and other aspects of the economy. 

While fighting inflation has been the Fed’s focus the past few years, Fed Chair Jerome Powell recently signaled a pivot toward the labor market, raising expectations for a rate cut. Nevertheless, any big inflation surprises could still meaningfully move markets.

Economic and Earnings Calendar

Monday

• August New York Fed Survey of Consumer Expectations: This is a measure of peoples’ expectations for inflation, jobs prospects, earnings growth, and more. 
• July Consumer Credit: Borrowing activity gives insight into broader economic activity.

Tuesday

• August NFIB Small Business Optimism: This measures how small business owners feel about current and future economic conditions.
• Earnings: Oracle (ORCL), Synopsys (SNPS)

Wednesday

• August Producer Price Index: The PPI tracks price trends that producers face and is down significantly from its peak earlier in the cycle. 
• July Wholesale Inventories and Sales: Wholesalers often operate as an intermediary between manufacturers and retailers, serving as a key part of the goods supply chain.
• Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market.

Thursday

• August Consumer Price Index: The CPI is one of the most popular indicators for tracking consumer price trends and is a marquee release for market watchers. 
• August Treasury Statement: This summarizes the U.S. federal government budget by tracking government revenues and expenditures.
• Weekly Jobless Claims: This high frequency labor market data gives insight into filings for unemployment benefits. Initial jobless claims have remained mostly steady, while continuing claims have increased of late.
• Earnings: Adobe (ADBE), Kroger (KR)

Friday

• September University of Michigan Consumer Sentiment: How consumers feel about economic conditions affect their spending habits. This survey places a particular focus on inflation and its trajectory.

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