Spending Swells – Economic Data and Retail Earnings
This past Wednesday morning, the Commerce Department confirmed a technically positive data measure that several investors were perversely dreading to hear: retail sales. For the month of October, retail sales were up 1.3% compared to the month of September, slightly over the forecasted 1.2%. Although seemingly positive, this sent markets down, as several investors care more about the Fed’s plan for interest rates in December. With increasing consumer spending numbers, this can potentially confirm the Fed’s next 75 basis point hike and show that they may not be willing to pivot just yet. However, Federal Reserve Governor Christopher Waller did express his willingness for a hike of half of a percentage point, but after seeing more data that can warrant such an action.
Nevertheless, these words did not stop some bullish investors from holding off on today’s trading day, even after Target’s earnings report. Target, the nation’s seventh-largest retailer, did miss earnings expectations with high costs, pointing to a decrease in sales due to high inflationary pressure. They also reported a weak fourth-quarter guidance even though they will be entering a usually high time of sales due to holiday spending. This negative news comes after other large retailers like Walmart, Lowe’s, and Home Depot beat earnings claiming inflation had not affected consumer spending. Nevertheless, before we head to the next interest rate decision on December 14th, investors still have earnings of retailers like Kohl’s, Macy’s, and Gap, as well as tomorrow’s jobless claims report and data on housing starts and building permits,
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.