Daily Markets: What do retail earnings and retail sales say about the holiday season?

The big picture today
The equity indices of the Asia-Pacific area closed today’s session mostly lower. Japan’s Nikkei finished the day up 0.1% and India’s Sensex gained 0.2%, but Hong Kong’s Hang Seng and China’s Shanghai Composite both ended the day down 0, 5%. Australia’s ASX All Ordinaries fell 0.3% and South Korea’s KOSPI lost 0.1%. By mid-day trading, European stock indices were down across the board and US futures pointed to a mixed market open this morning, even as geopolitical tensions surrounding a missile landing in Poland eased.
Again, we could see some movement in US equity futures once we get the October retail sales report in hand. After the rapid climb in stocks since last week’s October consumer price index, weaker-than-expected inflation data probably priced the stock market perfectly. So any disappointment in the October retail sales report and what it says about consumer spending appetites amid rising layoff announcements and continued inflationary pressures could fuel worries about the 2022 holiday shopping season.
Setting the stage for that relationship, Objective (TGT) it predicted a surprise drop in holiday quarter sales due to inflation and “radical shifts” in consumer spending, raising questions about discretionary spending. If retailers’ earnings come out today and the October retail sales report falls short of expectations, the market could give back a portion of its recent gains. After the market closes, investors’ attention will shift to the technology with Cisco (CSCO) And NVIDIA (NVDA) serving up their latest achievements and directions. Main areas of interest will be what the two have to say about corporate spending and the PC and data center markets.
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International economy
Japan’s core machinery orders, excluding those for ships and power companies, fell 4.6% month-on-month in September, missing expectations for a 0.7% increase. Year-on-year, private sector machinery orders grew 2.9% in September, down from +9.7% in August.

The UK annual inflation rate jumped to 11.1% in October 2022 from 10.1% in September, well above market expectations of 10.7%. Inflation would have risen to around 13.8% if the government had not intervened to limit the price of household energy bills. Prices of food and soft drinks (16.2% vs 14.5%) also increased.
Today, with the Digital Services Act (DSA), a new set of EU rules comes into force for a safer and more responsible online environment. The DSA applies to all digital services that connect consumers to goods, services or content. It creates comprehensive new obligations for online platforms to reduce harm and counter online risks, introduce robust protections for online users’ rights, and place digital platforms under a new single framework of transparency and accountability.
Domestic economy
In addition to the usual Wednesday weekly data points of MBA Mortgage Applications Index data and EIA Crude Oil Inventories data, there are several announcements today both before and after market open:
Export and import price changes will be released at 8:30 AM ET with estimates calling for both metrics to show slower rates of decline than the previous release on a monthly basis. The consensus on export prices is for a 0.20% drop from the previous 0.80% and import prices are forecast for a 0.30% drop, significantly less than the 1.20% drop by September.
The Retail Sales will also be released at 8:30am ET with MoM expectations for the top line number coming in at 0.90% versus a flat September (0%). Ex-Auto sales are expected to rise 0.55% month-on-month from 0.10% in September. Slightly lower gas prices appear to be contributing to the expected decline in auto ex-fuel month-on-month sales from 0.28% earlier to 0.10% in October.
9:15 AM ET will see Industrial Production and Capacity Utilization data released with Capacity Utilization forecast to rise slightly to 80.4% from a previously reported 80.3% and MoM production in increase at a slower but still positive pace of 0.20% compared to last month’s 0.40%.

As of 10:00 AM ET, September corporate inventories are expected to show 0.50% MoM growth versus 0.80% previously reported. Also updating is the NAHB housing market index for November, which is expected to fall to 36 from a previously reported 38 as high interest rates continue to put pressure on the housing market.
And as we approach the Thanksgiving holiday, the Farm Bureau’s 37th Annual Survey estimates the average cost of a classic Thanksgiving holiday at $65.04 this year, $10.74 or a 20% increase over the average $ 53.31 last year. Looking at 2020’s $46.90, that’s even more expensive. An item not on the Farm Bureau’s grocery list? Alcohol.
According to AAA, nearly 55 million people in the United States are expected to travel for the upcoming Thanksgiving holiday, making it one of the busiest for travel in the past two decades.
Markets finished ahead with the Dow up 0.17%, the S&P 500 up 0.87%, the Nasdaq Composite up 1.45% and the Russell 2000 up 1 ,50%. All sectors grew except Healthcare and Materials, which recorded a nominal decline of less than 0.20%. Communication services and consumer discretionary stocks led yesterday. Gold prices were unchanged during regular trading on Tuesday but surged after trading following reports that Russian missiles slewed through Poland near the Ukrainian border, killing two.
Here’s how the leading market indicators stack up since the beginning of the year:

  • Dow Jones Industrial Average: -7.56%
  • S&P 500: -16.25%
  • Nasdaq Composite: -27.40%
  • Russell 2000: -15.86%
  • Bitcoin (BTC-USD): -63.67%
  • Ether (ETH-USD): -66.10%

Actions to watch
Before trading for US listed stocks begins, Lowe’s (LOW), Target, And TJX (TJX) will report their latest quarterly results.

Disney (DIS) Disney World will raise ticket prices for its four parks on Dec. 8 with the cost of entry into the Magic Kingdom expected to nearly double for the holidays. The price hikes at Disney World follow a series of new hikes at Disneyland in California.
Institutional investors advised by JP Morgan Global Alternatives, part of JPMorgan Chase (JPM)and Haven Realty Capital Form Joint Venture to Acquire and Develop More than $1 Billion in New Rental Communities in the U.S.
Carlyle Group (CG) it is said to be in talks with other private equity firms to form a group to bid for private urgent care provider Heritage Provider Network.
Estee Lauder (EL) announced that it has agreed to acquire Tom Ford for $2.8 billion. The company expects to fund this transaction through a combination of cash, debt and $300 million in delayed payments to sellers due July 2025. 0.15)-$(0.05) and be approximately EPS neutral diluted adjusted in FY24.
Apple (AAPL) CEO Tim Cook shared that the company would source some of its chips from Arizona as the company looks to diversify its supply chain.
Defense and tactical systems maker KWESST Micro Systems (KWE) is expected to begin trading in the coming week. Readers interested in learning more about the upcoming IPO calendar should visit the Nasdaq’s Latest and Upcoming IPOs page.

After the market closes today
Bath & Body Works (BBWI), Cisco (CSCO), Kulicke & Soffa (KLIC), Nvidia (NVDA) and Sonos (SONO) are expected to report quarterly results after shares stopped trading today. Those looking for more on which companies are reporting when, head to the Nasdaq’s earnings calendar.
On the horizon
Thursday 17 November

  • UK: car registrations – October
  • Germany: Car registrations – October
  • Eurozone: Consumer Price Index – October
  • United States: Weekly Initial and Continuing Unemployment Claims
  • United States: Start of housing and building permits – October
  • United States: Philadelphia Fed Index – November
  • United States: EIA weekly natural gas inventories

Friday 18 November

  • UK: Retail Sales – October
  • United States: Existing Home Sales – October

Thought for the day
“The biggest problem is typically overly ambitious expectations combined with undercapitalization.” ~Geoffrey Moore

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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