Retail sales, big bank results, and Netflix earnings: What to know this week

Stocks closed another week at record highs as investors began to digest quarterly earnings releases and debate intensified over what the Federal Reserve will do at its November meeting.

For the week, the Nasdaq (^IXIC), S&P 500 (^GSPC), and Dow Jones Industrial Average (^DJI) all rose more than 1%, with both the Dow and S&P 500 closing at all-time highs on Friday.

Next week, a monthly report on retail sales will lead the economic calendar as investors assess whether the economy is regaining momentum after a surprisingly strong September jobs report.

In corporate news, results from Bank of America ( BAC ), Goldman Sachs ( GS ), and Morgan Stanley ( MS ) will round out earnings from the big banks, while reports from United Airlines ( UAL ) and Netflix ( NFLX ) will also highlight the week.

A building case for no-cut November

Last week, speculation grew that the Federal Reserve would not cut interest rates further at its November meeting. September's jobs report, which included another drop in the unemployment rate and one of the highest monthly payrolls numbers of the year, helped ease fears of a sharp deterioration in the labor market.

On Thursday, the latest Consumer Price Index (CPI) report showed core prices rose more than expected. On Friday, the latest producer price index (PPI) told a similar story, with core prices rising 2.8%, compared to Wall Street expectations for a 2.6% rise.

Some have argued that given this information — as well as recent minutes from the Fed's September meeting revealing that “some” officials would support a small interest rate cut — the central bank could keep rates steady in November.

“As long as inflation doesn't come so dramatically back to 2% and there's no crisis in the labor market, which I don't foresee, I don't think that gives the Fed a reason to cut further this year,” Eric Wallerstein, chief market strategist at Yardeni Research, told Yahoo Finance.

As of Friday, markets were seeing about an 18% chance of the Fed not cutting in November, up from the 3% chance seen a week ago, according to the CME FedWatch tool.

reading retail

Stronger-than-expected economic data helped drive “no cuts” talks. Investors will have another update in that category this week with the release of the September retail sales report on Thursday.

Economists expect September retail sales to increase 0.2% from the previous month. In August, retail sales rose 0.1%, defying the decline expected by economists.

“Retail sales, in particular, could be a significant market driver as series diversification increases, and scrutiny on consumer health intensifies,” Jefferies' economics team led by Thomas Simmons wrote in a note to clients on Friday. “We would caution against missing too deeply against the consensus (to the upside or downside) because retail sales measure spending with a very heavy weighting towards goods rather than services, and it is measured in nominal terms. Weakness can only be the cause. Continued deflation or Commodity Inflation.”

Netflix takes the big screen

Big banks have largely passed Wall Street's test to open earnings season. Investor focus will be on financials early in the week with reports from Morgan Stanley, Goldman Sachs and Bank of America before shifting to Netflix results after hours on Thursday.

The streaming giant's stock is up nearly 50% this year and is trading near all-time highs. Wall Street expects Netflix to report earnings per share of $5.16 on revenue of $9.77 billion. This will represent an increase in revenue of approximately 40% over the previous year.

But Wall Street is widely debating whether the stock can sustain its huge run. In the near term, Citi analyst Jason Bazinet believes Netflix's announcement of further price increases in the US could be a catalyst for the stock.

“We expect Netflix stock to trade higher on the US rate hike announcement, but we expect shares to ultimately trade lower as investors' hopes for $25 per share earnings in 2025 are dashed,” Bazinet wrote.

Yields are increasing

The 10-year Treasury (^TNX) hovered near 4.1% for the first time since late July.

The 10-year has now added roughly 30 basis points over the past week as investors scaled back their expectations for interest rate cuts amid signs that inflation may be firmer than initially thought while economic growth data held steady.

Over the past few years, there has been a headwind for high yield stocks. But Michael Kantrowitz, chief investment strategist at Piper Sandler, told Yahoo Finance on Thursday that yields probably haven't risen enough to cause too many headwinds yet.

“I don't think this backup in interest rates is worrisome for equities overall,” Kantrowitz said. “But where it shows is in leadership.

Kantrowitz noted that real estate ( XLRE ) and the small-cap Russell 2000 Index ( ^RUT ), which benefited from investors anticipating lower rates, saw the 10-year yield pull back amid recent gains.

For now, Kantrowitz added, rising rates are setting the tone The market lead is higher than the S&P 500 index.

“If rates continue to go higher, I don't think it's a huge problem for equities unless it's been a few months, I'd say,” he said.

monday

Economic data: NY Fed 1-Year Inflation Expectations, September (3% ago)

income: No significant earnings.

Tuesday:

Economic data: Empire Manufacturing, October (0.5 expected, 11.5 prior)

income: Bank of America (BAC), Charles Schwab (SCHW), Citi (C), Goldman Sachs (GS), JB Hunt (JBHT), Johnson & Johnson (JNJ), Progressive (PGR), State Street (STT), United Airlines (UAL), UnitedHealth Group (UNH), Walgreens Boots Alliance (WBA)

on wednesday

Economic data: MBA mortgage applications, week ended Oct. 11 (-5.1% earlier); Import Price Index month-on-month, September (-0.3% expected, -0.3% earlier); Export Price Index month-on-month, September (-0.3% expected, -0.7% earlier)

income: Abbott (ABT), Alcoa (AA), ASML (ASML), Citizens (CIA), Discover Financial Services (DFS), Morgan Stanley (MS)

Thursday

Economic data: Initial jobless claims, week ended Oct. 12 (258,000 earlier); Retail sales month-on-month, September (0.2% expected, 0.1% earlier); Retail sales excluding autos and gas, September (0.3% expected, 0.2% earlier); Philadelphia Fed Business Outlook, October (2.9 expected, 1.7 earlier); Industrial production, month-on-month, September (0% expected, 0.8% earlier); NAHB Housing Market Index, October (42 expected, 41 prior); Leading indicators, March (-0.1% expected, +0.1% earlier); Existing home sales, month-on-month, March (-5.1% expected, 9.5% prior)

income: Netflix (NFLX), Blackstone (BX), Travelers (TRV), First National Bank (FBAK), Western Alliance (WAL), WD-40 (WDFC)

Friday

Economic data: Housing starts month-on-month, September (-0.9% expected, 9.6% earlier); Building permits month-over-month, September (-0.3% expected, 4.9% earlier)

Earnings: Ally Financial (ALLY), American Express (AXP), Comerica (CMA), Procter & Gamble (PG)

Josh Schafer is a reporter for Yahoo Finance. Follow him in X @_joshschafer.

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