What to know this week

Investors returning from the Thanksgiving holiday will face a deluge of economic releases in the week ahead as Wall Street heads into the final month of 2022 and braces for the Federal Reserve’s last interest rate hike of the year.

The government’s monthly employment report, data on the housing market, a second look at GDP growth, PCE inflation, and a reading on consumer confidence are among the many highlights of a busy economic calendar in the coming days.

The Labor Department’s latest employment report, set for release at 8:30 am ET Friday morning, will highlight the schedule.

Economists expect nonfarm payrolls to rise by 200,000 last month, according to estimates from Bloomberg. If realized, the number would mark another downtrend in the labor market but reflect still-robust hiring on a historical basis.

Strong labor market readings have stoked worries that Fed officials will stay the course on aggressive rate hikes and overshoots on monetary tightening.

“Recent monthly data from the advanced economies have tended to exceed analysts’ gloomy expectations,” Capital Economics chief global economist Jennifer McKeown said in a recent note. “However, this resilience probably also reflects a lag before higher interest rates transmit to the economy and firms are forced to reduce employment.”

On the inflation front, investors will be watching the personal consumption expenditures’ (PCE) price index out Thursday to see whether the recent trend of easing inflation holds up. On a monthly basis, PCE is expected to show a 0.4% rise in October, up from 0.3% during the prior month, according to Bloomberg estimates. Over the prior year, PCE inflation is expected to have eased to a rate of 6% from 6.2% previously.

According to Bank of America’s November fund manager survey, investors do not expect the Fed to pivot – or change courses on rate hikes – until US PCE inflation falls below 4%.

For traders, this year’s action has been all about what the Federal Reserve will do next, and fresh economic figures should offer clues about whether a 50- or 75-basis-point increase in the Fed’s benchmark interest rate range awaits investors in mid-December .

As of Sunday morning, markets were pricing in a roughly 75% chance the Federal Reserve will deliver a 50-basis-point rate hike following the conclusion of its next meeting on December 14, data from the CME Group showed.

Federal Reserve Board Chairman Jerome Powell arrives to speak during a news conference following a Federal Open Market Committee meeting, at the Federal Reserve Board Building in Washington, DC, on November 2, 2022. - The Federal Reserve delivered another steep interest rate increase on Wednesday , as expected, with its move to cool red-hot inflation taking on more weight amid the political maelstrom ahead of key US midterm elections.  The latest three-quarter percentage point increase takes the benchmark lending rate to 3.75-4.0 percent, the highest since January 2008. (Photo by Mandel NGAN / AFP) (Photo by MANDEL NGAN/AFP via Getty Images)

Federal Reserve Board Chairman Jerome Powell arrives to speak during a news conference in Washington, DC, on November 2, 2022. (Photo by MANDEL NGAN/AFP via Getty Images)

A readout of minutes from the Fed’s November meeting also indicated a “substantial majority” of officials believe it will soon be time to slow the current pace of increases. But a strong November jobs report and a higher than expected PCE figure may dash deceleration hopes.

“It’s premature in my mind to take anything off the table,” San Francisco Fed President Mary Daly said last week when asked whether a 75-basis point rate hike is still possible. “I’m going into the [Fed’s December 13-14] meeting with the full range of adjustments that we could make on the table and not taking off prematurely.”

While investors are hopeful for a meaningful slowdown in inflation and a subsequent policy shift over the next year, some Wall Street strategists are raising doubts about the Federal Reserve’s ability to fulfill its goals of maximum employment, stable prices, and moderate long-term interest rates .

Strategists at the BlackRock Investment Institute warned last week global investors are in a “new macro regime where central banks are causing recessions rather than coming to the rescue.”

“That is clear in the rate path of major central banks set to overtighten policy as they battle inflation,” BlackRock’s team, led by Jean Boivin, said in the weekly commentary. “We think they will eventually pause but not cut rates when confronted with the damage of sharp rate hikes – that could be the reality of recession or the appearance of financial cracks, as seen in the UK”

Billionaire hedge funder Bill Ackman also said in a recent call with investors that interest rates are “meaningfully below where they are going to go,” and the firm does not believe the Federal Reserve will be able to get inflation back to a consistent 2% level.

“We think that is, of course, a risk for equities,” Ackman said. “And part of our thesis is we think inflation is going to be structurally higher.”

Elsewhere in this week’s economic data, a second estimate of third-quarter GDP, Case-Shiller home price data, manufacturing activity gauges, and the Conference Board’s measure of consumer confidence are all on tap.

Investors are ready to close the curtains on the latest earnings season, but several standout reports will still be released, including Hewlett Packard Enterprise (HPE), Salesforce (CRM), Dollar General (DG), and Kroger (KR).

Last week, US markets continued to build on the recent moment in a week of trading shortened by the Thanksgiving holiday.

The S&P 500 ended modestly lower on Black Friday but finished the week in the green, up roughly 1.5%. The Dow Jones Industrial Average and Nasdaq Composite also advanced over the three and a half-day trading periods, rising 1.8% and 0.7%, respectively.

Economic Calendar

Monday: Dallas Fed Manufacturing ActivityNovember (-23.0 expected, -19.4 during prior month)

Tuesday: FHFA Housing Pricing IndexSeptember (-1.3% expected, -0.7% during prior month); House Price Purchasing IndexQ3 (4.0% during prior quarter); S&P CoreLogic Case-Shiller 20-City Compositemonth-over-month, September (-1.15% expected, -1.32% during prior month); S&P CoreLogic Case-Shiller 20-City Compositeyear-over-year, September (10.65% expected, 13.08% during prior month); S&P CoreLogic Case-Shiller US National Home Price Index (12.99% during prior month); Conference Board Consumer ConfidenceNovember (100.0 expected, 102.5 during prior month)

Wednesday: MBA Mortgage Applications, week ended Nov. 25 (2.2% during prior week); ADP Employment ChangeNovember (195,000 expected, 239,000 during prior month); Annualized GDPquarter-over-quarter, Q3 second estimate (2.7% expected, 2.6% prior estimate); Personal Consumptionquarter-over-quarter, Q3 second estimate (1.5% expected, 1.4% prior estimate); GDP Price Indexquarter-over-quarter, Q3 second estimate (4.1% expected, 4.1% prior estimate); PCE Cores, quarter-over-quarter, Q3 second estimate (4.5% prior estimate);​​Advanced Goods Trade BalanceSeptember (-$90.2 billion expected, -$92.2 billion during prior month); Wholesale Inventoriesmonth-over-month, October preliminary (0.5% expected, 0.6% during prior month); Retail Inventoriesmonth-over-month, October (0.4% during prior month); MNI Chicago PMI, November (47.0 expected, 45.2 during prior month); Pending Home Salesmonth-over-month, October (-5.2% expected, -10.2% during prior month); JOLTS Job OpeningsOctober (10,325 million expected, 10,717 million during prior month); Federal Reserve Beige Book

Thursday: Challenger Job Cutsyear-over-year, November (48.3% during prior month); PersonalIncomeOctober (0.4% expected, 0.4% during prior month); Personal SpendingOctober (0.6% expected, 0.8% during prior month); PCE Deflatorsmonth-over-month, October (0.4% expected, 0.3% during prior month); PCE Deflatorsyear-over-year, October (6.0% expected, 6.2% during prior month); PCE Core Deflatormonth-over-month, October (0.3% expected, 0.5% during prior month); PCE Core Deflatoryear-over-year, October (5.0% expected, 5.1% during prior month); Initial Jobless Claims, week ended Nov. 26 (240,000 during prior week); Continuing Claims, week ended Nov. 19 (1,551 million during prior week); S&P Global US Manufacturing PMINovember final (49.8 expected, 50.2 during prior month); Construction spendingmonth-over-month, October (-0.2% expected, -0.2% during prior month); ISM ManufacturingNovember (49.8 expected, 50.2 during prior month); ISM Prices PaidNovember (46.6 during prior month); ISM New OrdersSeptember (49.2 during prior month); ISM EmploymentNovember (50.0 during prior month); WARDS Total Vehicle SalesNovember (14.90 million expected, 14.90 prior month)

Fridays: Change in Nonfarm PayrollsNovember (200,000 expected, 216,000 during prior month); Unemployment RateNovember (3.7% expected, 3.7% during prior month); Average Hourly Earningsmonth-over-month, November (0.3% expected, 0.4% during prior month); Average Hourly Earningsyear-over-year, November (4.6% expected, 4.7% prior month); Average Weekly Hours All EmployeesNovember (34.5 expected, 34.5 during prior month); Labor Force Participation RateNovember (62.3% expected, 62.3% during prior month); Underemployment RateNovember (60.8% prior month)

Earnings Calendar

Monday: Arrowhead (ARWR), AZEK (AZEK)

Tuesday: Baozun (BZUN), Bilibili (BILI), Compass Minerals (CMP), CrowdStrike (CRWD), Hewlett Packard Enterprise (HPE), Hibbett (HIBB), Intuit (INTU), NetApp (NTAP), Workday (WDAY)

Wednesday: Donaldson (DCI), Five Below (FIVE), Frontline (FRO), Hormel Foods (HRL), La-Z-Boy (LZB), Nutanix (NTNX), Okta (OKTA), Petco Health and Wellness (WOOF), Pure Storage (PSTG), PVH (PVH), Royal Bank of Canada (RY), Salesforce (CRM), Snowflake (SNOW), Splunk (SPLK), Synopsys (SNPS), Titan Machinery (TITN), Victoria’s Secret (VSCO)

Thursday: Ambarella (AMBA), American Outdoor Brands (AOUT), Big Lots (BIG), ChargePoint (CHPT), Designer Brands (DBI), Dollar General (DG), G-III Apparel (GIII), Kroger (KR), Li Auto (LI), Manchester United (MANU), Marvell Technology (MRVL), Patterson Companies (PDCO), Toronto-Dominion Bank (TD), Ulta Beauty (ULTA), Veeva Systems (VEEV), Weber (WEBR), Zscaler (ZS )

Fridays: Cracker Barrel (CBRL), Genesco (GCO)

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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