Wednesday’s CPI release could be key, with Oracle earnings after Monday market close – Crypto News

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• S&P 500 pulled back 1.3% last week, trading as low as 4,430.
• Wednesday sees the release of the US CPI for August.
• Oracle reports earnings on Monday after the close.
• US Retail Sales for August arrive on Thursday and are expected to add 0.2% MoM.
• Adobe and Lennar report earnings on Thursday.

The S&P 500 lost 1.3% last week but attempted to rebound on Friday though the index lost much of its gains toward the end of its session. The market is more sanguine on Monday, and the S&P 500 advanced 0.4% at the open. Both the Dow Jones Industrial Average and the NASDAQ Composite are trading slightly above the S&P 500’s performance. 

Much of the buoyancy comes due to eagerness for Wednesday’s US Consumer Price Index (CPI) release for August. Many traders see this release as the nail in the coffin for any interest rate hikes from the Federal Reserve (Fed) for the rest of the year. A more certain end to monetary tightening means the market can look forward to cuts – even if they aren’t expected for at least six months. 

The earnings calendar is largely on vacation, but Oracle’s (ORCL) quarterly results come after the close on Monday

S&P 500 News: CPI, Retail Sales, Consumer Sentiment all on deck

Inflation has been steadily reducing since the summer of 2022, but now the United States is beginning to get within spitting distance of the Fed’s goal for 2% annual core inflation. July’s CPI had core reaching 4.7% YoY. With Wednesday giving us August’s figure, the consensus has core inflation rising 0.2% from last month – the same as July’s result.

This gives the equity market hope that the August report won’t have enough surprises to alter the expectation that the Fed will keep interest rates unchanged at its September 20 meeting next week. The CME Group’s FedWatch Tool gives us a 93% chance that rates remain unchanged in the range of 5.25% to 5.5%. It also places the odds in the high 50% range that the central bank declines to raise rates at both the November and December meetings. This is why the equity market now views the rate hiking cycle as completely over despite Fed officials still remaining publicly open to a higher terminal rate.

Consensus for the monthly headline CPI has risen from 0.2% in July to 0.5% in August due to the rising price of gasoline. As long as the core monthly CPI is not higher than 0.2%, then the stock market should be happy. Otherwise, any deviation higher than consensus will likely cause a steep drop in the S&P 500 index.

Then on Thursday US Retail Sales for August are expected to deliver a 0.2% MoM growth rate. This is much lower than the 0.7% seen in July, but the market approves of slower growth since it means that inflation is less likely to perk up.

Friday gives us the preliminary Michigan Consumer Sentiment Index for September. Analysts are shooting for 69.5, the same reading as August but lower than July’s 71.6. A higher reading tends to be bullish for the US Dollar and bodes well for the strength of the US economy.

Oracle, Adobe and Lennar headline week’s earnings releases

Legacy tech giant Oracle kicks off the week with its fiscal first quarter 2024 earnings coming after Monday’s close. Consensus on Larry Ellison’s firm is split down the middle. Of the 21 analysts covering the stock, 11 cut their earnings per share (EPS) estimate in the last three months, while 10 raised their forecasts.

Consensus comes at $1.15 in adjusted EPS on revenue of $12.47 billion. This contrasts with the year-ago result of $1.03 per share on $11.45 billion in sales.

Then the week is mostly uneventful until Thursday when Adobe (ADBE) and Lennar (LEN) both report. Adobe management should give more details about its acquisition of Figma, another digital design software company. Analyst consensus calls for $3.97 in adjusted EPS on revenue of $4.87 billion.

Lennar will give the equity market a chance to assess the US housing market. Lennar is one of the largest homebuilders in the US, and shareholders have to wonder how badly mortgage rates topping 8% are going to put a lid on new home sales. The consensus forecast calls for $3.50 in adjusted EPS on revenue of $8.52 billion.