US Stocks Muted on Monday as Investors Eye Key Events

Wall Street’s main indices remained flat on Monday, with the S&P 500 and Dow Jones both declining by 0.01% and 0.08% respectively and the Nasdaq rising 0.03%.

This muted Monday session came at the beginning of a week in which investors will be focusing on key retail earnings and the Federal Reserve’s Jackson Hole Economic Symposium. 

Jackson Hole Symposium

The Jackson Hole Economic Symposium is an annual three-day conference hosted by the Federal Reserve and attended by central bank representatives and policymakers from around the world.

The event will take place between 21-23 August, with Fed Chair Jerome Powell due to address the conference on Friday morning. Investors will be paying close attention to this speech for clues about the Fed’s next moves ahead of its September meeting. 

Markets are currently pricing in an 84% chance that the Fed will cut rates by 25 basis points in September, according to CME’s FedWatch tool.

Expectations of a rate cut were fuelled earlier this month by weak jobs data. However, although headline inflation was reported lower than expected in July, it remains above the Fed’s target.

Furthermore, the Producer Price Index (PPI), which measures what domestic US producers charge for goods and services, jumped to 3.3% on an annual basis in July, considerably more than had been expected. 

This hotter than expected PPI reading indicates that the effect of tariffs is beginning to filter through to the US economy.

Retail Earnings in Focus

Earnings season is winding down, with more than 90% of S&P 500 companies having already announced results. However, a few big names are yet to report.

This week, retail earnings take centre stage, with Home Depot, Target and Walmart slated to report on Tuesday, Wednesday and Thursday respectively.

Investors will be eyeing these key earnings for signs as to how the US consumer is holding up amidst ongoing uncertainty surrounding inflation and tariffs. In particular, Walmart earnings are often seen as a proxy for consumer sentiment in the US.

Expectations are mixed. Wall Street analysts expect revenue and earnings per share (EPS) at both Walmart and Home Depot to have grown year on year.

Walmart is expected to report revenue and earnings per share (EPS) growth of 3.6% and 9% respectively. At Home Depot, revenue and EPS are anticipated to have risen 5% and 1% respectively. 

On the other hand, Target is expected to report declining revenue and earnings in the second quarter. Revenue is anticipated to have dropped 2.2% year on year, whilst EPS is expected to have slumped 21%. 

As well as the earnings themselves, market participants are likely to pay close attention to the retailers’ outlook for the remainder of the year and the effect they anticipate from tariffs.

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