Markets on Edge: PCE Inflation Data, Fed Speeches & Retail Earnings to Drive Rate Outlook

Markets Brace for Key Inflation Data, Fed Speeches, and Earnings from Retail and Consumer Leaders

Investors are entering a data-heavy week as inflation readings, Fed commentary, and a series of high-profile earnings reports set the tone for near-term market direction. With consumer sentiment weakening and the Federal Reserve holding rates steady, market participants will focus on whether economic indicators support a continued soft-landing narrative—or reignite concerns about inflation and growth.

February PCE to Anchor Inflation Expectations

The highlight of the week is Friday’s release of the February Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation gauge. January data showed both headline and core PCE rising 0.3% month-over-month. Economists at Bank of America expect similar readings in February, though they caution core PCE could round up to 0.4%.

Personal income is expected to rise 0.4%, while consumer spending is forecast to climb 0.7%, driven by stronger services activity. Any upside surprise could push back expectations for rate cuts later this year.

Consumer Sentiment and Housing Data Add to Macro Picture

Consumer confidence readings will add another layer to the outlook. The Conference Board’s Consumer Confidence Index is due Tuesday, while the University of Michigan’s final March Sentiment Index lands Friday. The preliminary Michigan survey showed sentiment fell sharply to 57.9, with short-term inflation expectations rising to 4.9%.

Housing market indicators remain under pressure, with affordability still a key constraint. Tuesday brings the S&P Case-Shiller Home Price Index and new home sales data, while pending home sales follow on Thursday. Earnings from KB Home on Monday could offer insight into buyer demand and pricing trends.

Fed Speeches Could Influence Rate Outlook

Traders will closely monitor remarks from several Fed officials, including New York Fed President John Williams, Richmond’s Tom Barkin, and Atlanta’s Raphael Bostic. With recent inflation data running slightly above target, policymakers’ tone on rates and the balance sheet could impact rate-sensitive sectors and the broader risk outlook.

Retail and Consumer Earnings Take Center Stage

Tuesday’s report from GameStop will attract attention after the company posted a surprise profit last quarter. Dollar Tree follows Wednesday with analysts expecting $2.20 EPS on $8.2 billion in revenue, as tariff exposure and Family Dollar’s performance remain in focus. Lululemon closes the week with a Thursday report—analysts are bullish on earnings of $5.87 per share and 11.9% revenue growth, citing brand strength and global expansion.

Chewy, Cintas, Paychex, McCormick, and Oklo also report during the week, adding depth across consumer staples, industrials, and energy sectors.

Market Forecast: Cautious Bullish Bias Pending PCE Clarity

The market enters the week with a cautiously bullish bias. If the PCE data aligns with forecasts and Fed speakers maintain a steady tone, equity markets could find support from strong retail earnings. However, a hotter inflation print or hawkish Fed rhetoric may challenge that view late in the week.

More Information in our Economic Calendar.