Lending markets

Markets closed on Monday in respect of June 19; Central banks react to high inflation

Markets were closed on Monday for the June 16 holiday that commemorates the emancipation of enslaved African Americans. The remainder of the week remains relatively light on new economic data and earnings reports.

Economic data and benefits

New and existing home sales highlight the economic calendar this week in addition to the weekly jobless claims report. New home sales are expected to be slightly higher than last month with an annualized 595,000 new sales forecast for May compared to 591,000 in April. Existing home sales, meanwhile, are expected to be slightly lower at an annualized 5.4 million sales from the 5.61 million reported in April. Finally, initial jobless claims should remain relatively stable at 230,000 after 229,000 new claims the previous week.

Meanwhile, the biggest names expected to release their quarterly performance include Accenture (ACN), Rite Aid (RAD), FedEx (FDX), CarMax (KMX) and Carnival (CCL).

Rite Aid, in particular, is expected to perform much worse compared to its year-ago quarter with second-quarter revenue projections of $5.8 billion versus $6.2 billion in the second quarter of 2021. The consensus for Rite Aid’s earnings per share (EPS) stands at -$0.70 versus $0.38 reported last year.

In its last quarter (Q1 2022), Rite Aid reported a negative earnings surprise of 186%. Supply chain disruptions and low store footfall are negatively impacting Rite Aid inventory and sales, with COVID-19 vaccines also not improving performance as much as previously reported, vaccination rates drastically decreasing, as the majority of Americans wanting the vaccine have already been fully vaccinated.

Interest rates and inflation

While investors will be watching new earnings reports and economic data releases, the biggest concern for many is the dynamic between rising interest rates and inflation, as fears of an impending recession grow with the more aggressive tightening of monetary policy by the Federal Reserve. Analysts are mixed on stock market pressures in the near future as JPMorgan said pressure on equities expected to ease as inflation cools as Morgan Stanley warns of further equity losses.

Meanwhile, the Federal Reserve is far from alone in making the decision to accelerate rate hikes, with the Swiss National Bank and the Bank of England voting for rate hikes last week. In addition, the European Central Bank is ready to fight against unwarranted financial market movements and braces for heightened volatility as it seeks to exit negative interest rates.

Finally, crypto investors will be waiting to see if cryptocurrencies can find support and recoup losses as Bitcoin (BTC) is now hovering around $20,000 and Ethereum (ETH) is trading just over $1,100 after. that both coins hit highs around $60,000 and $4,800 just in November.

Economic events this week

Tuesday

– 10:00 a.m. – Sales of existing homes

Wednesday

– 7:00 a.m. – MBA Mortgage Application Index

Thursday

– 8:30 a.m. – Initial and Continuing Claims

– 10:30 a.m. – EIA Natural Gas Inventories

Friday

– 10:00 am – Sales of new houses

– 10:00 a.m. – University of Michigan Consumer Sentiment – Preliminary

Revenue reports this week

Tuesday:

Before the bell:

LEN

After the bell:

LZB

Wednesday:

Before the bell:

WGO, KFY

After the bell:

KBH, WOR, FUL, SCS

Thursday:

Before the bell:

ACN, RAD, DRI, GMS, MSDS, APOG

After the bell:

FDX, SWBI, BB, CAMP

Friday:

Before the bell:

KMX, CCL

Sector and industry sentiment

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