Netflix results, retail sales, Davos: 1/16/2023 - 1/20/2023
World Economic Forum participants from around the world assemble in Switzerland. Investors in the United States face consumer and financial data from companies like Goldman Sachs and Netflix.
Markets
Dow Jones: 34,302.61 (+0.33%) 📈
S&P 500: 3,999.09 (+0.40%) 📈
Nasdaq: 11,079.16 (+0.71%) 📈
*Stock numbers as of market close on January 13th
This week, the World Economic Forum will draw the top business minds from across the world to the slopes of Davos, Switzerland. There, they will discuss the state of the world economy, de-globalization, and the conflict in Ukraine.
The government's retail sales report, another noteworthy inflation reading, and a significant influx of corporate earnings results from industry giants like Goldman Sachs GS 0.00%↑, Netflix NFLX 0.00%↑, Procter & Gamble PG 0.00%↑, and American Airlines AAL 0.00%↑ will all be presented to investors during a holiday-shortened week here in the United States.
The U.S. stock and bond markets will be closed on Monday, January 16, in observance of Martin Luther King, Jr. Day.
This week marks the first time in Davos since 2020 that regular programming will return; in 2018, a scaled-down version of the typically crowded January event was conducted in May.
Politicians, CEOs, and billionaires in attendance are expected to prioritize issues such as the possibility of a worldwide recession, post-pandemic difficulties, climate change, and the crisis in Eastern Europe.
Despite worries about the economy, U.S. stocks have had a strong start to the year. All three major averages ended their second straight winning week on Friday.
While the S&P 500 and Dow Jones Industrial Average posted their best performances since November, with weekly rises of 2.7% and 2%, respectively, the technology-heavy Nasdaq Composite witnessed an outsized gain of 4.8% for the week.
However, the upcoming week will see the start of the busy fourth-quarter earnings season, which might put this rally to the test.
Big banks on Wall Street set the tone with disappointing results that revealed a stockpiling of emergency cash in anticipation of a potential slump. And some CEOs issued economic cautionary statements.
“We still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation, and the unprecedented quantitative tightening,” JPMorgan’s JPM 0.00%↑ Jamie Dimon said during an earnings call.
On Tuesday and Wednesday of this week, additional financial industry heavyweights will release their fourth-quarter financial results, including Morgan Stanley MS 0.00%↑, Interactive Brokers Group IBKR 0.00%↑, Charles Schwab SCHW 0.00%↑, and Wall Street's top investment bank Goldman Sachs GS 0.00%↑, which reportedly laid off more than 3,000 workers last week.
The quarterly report from Netflix, which is scheduled for release on Thursday, will be eagerly followed as well. This could hint at things to come for the IT sector's results, which are scheduled to start the following week.
The S&P 500 is expected to report a year-over-year decline in earnings of 3.9% for the fourth quarter, according to data from FactSet Research. This would mark the first year-over-year decline in earnings reported by the index since a 5.7% drop in the third quarter of 2020.
In terms of economic data, the U.S. Census Bureau's monthly retail sales figures will provide a snapshot of how consumers fared during the crucial holiday shopping season in December. Bloomberg questioned economists who predicted a decline in the headline number of -0.9%.
Larger-than-usual Christmas discounts, a persistent rotation back to services, and a post-pandemic habit for consumers to front-load holiday spending are all blamed by Bank of America strategists for the projected dip.
After last week's Consumer Pricing Index (CPI) came in at a lower 6.5%, the producer price index (PPI) will give investors a peek at inflation at the wholesale level.
Bloomberg surveyed economists who predict that headline PPI would increase at an annual rate of 6.8% in December, down from 7.4% in November. Additionally, the PPI that excludes food and energy slowed from its 6.2% annual growth rate in November to 5.5% in December.
Events Calendar
Monday, January 16
Markets closed for Martin Luther King, Jr. Day.
Tuesday, January 17
Empire Manufacturing, November (-8.6 expected, -11.2 during the prior month)
Goldman Sachs GS 0.00%↑, Morgan Stanley MS 0.00%↑, Interactive Brokers Group IBKR 0.00%↑, Signature Bank SBNY 0.00%↑, Pinnacle Financial Partners PNFP 0.00%↑, Old National Bancorp ONB 0.00%↑, Hancock Whitney Corp. HWC 0.00%↑, Citizens Financial Group CFG 0.00%↑, United Airlines UAL 0.00%↑
Wednesday, January 18
MBA Mortgage Applications, the week ended Jan. 13 (1.2% during the prior week)
New York Fed Services Business Activity, January (-17.5 during the prior month)
Retail Sales Advance, month-over-month, December (-0.9% expected, -0.6% during prior month)
Retail Sales Excluding Autos, month-over-month, December (-0.5% expected, -0.2% during prior month)
Retail Sales Excluding Autos and Gas, month-over-month, December (-0.2% expected, -0.2% during prior month)
Retail Sales Control Group, December (-0.4% expected, -0.2% during the prior month)
PPI Final Demand, month-over-month, December (-0.1% expected, 0.3% during the prior month)
PPI Excluding Food and Energy, month-over-month, December (0.1% expected, 0.4% during prior month)
PPI Excluding Food, Energy, and Trade, month-over-month, December (0.2% expected, 0.3% during prior month)
PPI Final Demand, year-over-year, December (6.8% expected, 7.4% during the prior month)
PPI Excluding Food and Energy, year-over-year, December (5.5% expected, 6.2% during prior month)
PPI Excluding Food, Energy, and Trade, year-over-year, December (4.6% expected, 4.9% during prior month)
Industrial Production, month-over-month, December (-0.1% expected, -0.2% during prior month)
Manufacturing (SIC) Production, December (-0.2% expected, -0.6% during the prior month)
Capacity Utilization, December (79.6% expected, 79.7% during the prior month)
Business Inventories, November (0.4% expected, 0.3% during the prior month)
NAHB Housing Market Index, January (31 expected, 31 during the prior month)
Federal Reserve Releases Beige Book; Net Long-Term TIC Flows, November ($67.8 billion)
Total Net TIC Flows, November ($179.9 billion)
Charles Schwab SCHW 0.00%↑, Discover Financial Services DFS 0.00%↑, PNC Financial Services PNC 0.00%↑, Kinder Morgan KMI 0.00%↑, J.B. Hunt Transport Services JBHT 0.00%↑, First Horizon Corp. FHN 0.00%↑, Alcoa AA 0.00%↑, Wintrust Financial WTFC 0.00%↑, H.B. Fuller Company FUL 0.00%↑, Prologis PLD 0.00%↑
Thursday, January 19
Building Permits, December (1.370 million expected, 1.342 million during the prior month, revised to 1.351 million)
Building Permits, month-over-month, December (1.4% expected, -11.2% during the prior month, revised to -10.6%)
Housing Starts, December (1357 million expected, 1.427 during the prior month)
Housing Starts, month-over-month, December (-4.9% expected, -0.5% during prior month)
Philadelphia Fed Business Outlook Index, January (-11.0 expected, -13.8 during the prior month, revised to -13.7)
Initial Jobless Claims, the week ended Jan. 14 (214,000 expected, 205,000 during the prior week)
Continuing Claims, the week ended Jan. 7 (1.655 million expected, 1.634 million during the prior week)
Netflix NFLX 0.00%↑, Procter & Gamble PG 0.00%↑, American Airlines AAL 0.00%↑, Comerica Inc. CMA 0.00%↑, Truist Financial Corp. TFC 0.00%↑, PPG Industries Inc. PPG 0.00%↑, Fastenal Company FAST 0.00%↑, M&T Bank MTB 0.00%↑, Fifth Third Bancorp FITB 0.00%↑, Northern Trust Corporation NTRS 0.00%↑, KeyCorp KEY 0.00%↑, SVB Financial Group SIVB 0.00%↑
Friday, January 20
Existing Home Sales, December (3.95 million expected, 4.09 million during the prior month)
Existing Home Sales, month-over-month, December (-3.4% expected, -7.7% during the prior month)
Ally Financial ALLY 0.00%↑, Schlumberger SLB 0.00%↑, State Street Corp. STT 0.00%↑, Huntington Bancshares Inc. HBAN 0.00%↑, Regions Financial Corp. RF 0.00%↑, Ericsson ERIC 0.00%↑
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