NASDAQ 100, Dow Jones, S&P 500: Showing Signs of Resurgence Ahead of Retail Week

Highlights

• Stock futures hint at Wall Street recovery.
• Earnings reports from major retailers due this week. 
• Retail Sales report to influence Fed policy.

Overview

Wall Street, after witnessing some choppy waters at the onset of August, is now giving signs of resurgence. As we kick off a new week, stock futures are displaying an upward trend, hinting at a possible recovery from previous setbacks.

Stock Futures and Past Performance:

Today’s financial landscape revealed an upward trend across several market indices. Futures associated with the S&P 500 rose by 0.21%. The Nasdaq-100 wasn’t far behind, showcasing an increment of 0.35%. Dow Jones Industrial Average futures, a perennial favorite for many investors, also reported growth, moving up by 56 points or 0.16%.

This paints an optimistic picture, especially when considering the previous week’s hesitant performance: The S&P 500 and the Nasdaq Composite dipped 0.3% and 1.9% respectively. However, the Dow Jones displayed its tenacity, notching a 0.62% gain, which marked its fourth positive week in the last five.

Earnings Reports and Consumer Insight

The upcoming week is rife with anticipation as major retail players, including the likes of Home Depot, Target, and Walmart, are set to release their earnings reports. These reports hold significance, offering insights into consumer behavior and trends. To add to this financial tableau, retail sales data from July will be unveiled on Tuesday. The previous week has set the stage with its inflation reports which have been a topic of discussion across trading floors. While the price increases have come down from their post-pandemic zenith, they still hover above the Federal Reserve’s 2% target, causing murmurs of concern.

Producer Price Index (PPI) and Its Implications

In the flurry of financial data, the U.S. producer price index (PPI) has stood out. Recent figures indicate a surge of 0.8% over the past 12 months leading up to July. This jump is significant when juxtaposed with the 0.2% growth of the previous month. Such data, especially when unexpected, has the potential to shuffle market dynamics. For instance, the rise in PPI has nudged Treasury yields higher, casting a shadow over rate-sensitive large-cap growth stocks. Yet, amidst these fluctuations, the consensus among market players is that the Federal Reserve might adopt a hands-off approach, avoiding credit-tightening for the rest of 2021.

Outlook & Forecast

Observing the market’s recent sideways trajectory, despite significant news and data, one could infer that the current events have been factored into stock prices.  However, tech stocks, with their impressive performance this year, might see some profit-taking from investors.

On the brighter side, sectors such as healthcare and energy, previously underperforming, are displaying signs of rejuvenation. The energy sector, in particular, buoyed by dwindling supply forecasts, surged by 1.6%. As we navigate through this week, with a slew of earnings reports and the PPI data in focus, the market sentiment leans towards cautious optimism with the results of the US Retail Sales report, likely setting the tone.