S&P 500 futures fall ahead of more retail earnings before the Thanksgiving holiday;  Disney up 9% in premarket

S&P 500 futures fall ahead of more retail earnings before the Thanksgiving holiday; Disney up 9% in premarket

Traders on the floor of the NYSE, Oct. 21, 2022.

Source: NYSE

S&P 500 futures fell early on Monday ahead of another batch of retail earnings to kick off a shortened week for the Thanksgiving holiday.

Futures tied to the broad market index were lower by 0.35%. Dow Jones Industrial Average futures were lower by 84 points, or 0.25%. Nasdaq 100 futures were 0.33% lower.

The major averages each posted an up day but a down week in the previous trading session. The Dow rose nearly 200 points, or 0.6%. The S&P climbed 0.5% and the Nasdaq Composite finished just 0.01% above the flat line.

Investors have been reflecting on the strength of the recent bear market rally, which kicked off earlier in the month with the October consumer price index reading and gained some steam with last week’s reading on wholesale prices. Traders last week were hung up on messaging from Federal Reserve officials, who were less impressed with the figures and reassessed their optimism around the possibility of slowing inflation.

Ed Yardeni of Yardeni Research said that in his view, the Oct. 12 low was the bottom and the S&P 500 could rise to near 4,300 by the end of the year, he told CNBC on “Closing Bell: Overtime” Friday night. The benchmark index currently sits at 3,965.34.

“What’s making the big difference in the market is the resilience of the economy, it’s been spectacular,” he said. “Everyone’s been debating whether we’re going to have a soft landing or a hard landing – meanwhile, there’s no landing whatsoever. The consumer didn’t get the recession memo and they keep spending.”

Retail sales increased in October, but on the corporate level Target reported slowing demand and Amazon announced it will lay off 10,000 employees — although Home Depot and Walmart have reported strong results.

“Despite what holiday season spending may suggest, retail stocks tend to be in the top three for November, but in the bottom three for December, and somewhere middle-of-the-pack in January,” Liz Young, SoFi’s chief investment strategist, said in a note this weekend.

“Seasonality has a place in market analysis and has some predictive power. But the power of the economic cycle is stronger, no matter the time of year,” she added. “With 375 basis points of Fed rate hikes so far, an inverted yield curve, spikes in inflation, and commodity prices still a part of the narrative, we can all but conclude that we are late in the economic cycle.”

This week, a historically quiet one ahead of Thanksgiving, investors will be busy with another group of retail earnings to digest before the start of the post-holiday shopping season. Best Buy, Nordstrom, Dick’s Sporting Goods and Dollar Tree are among the companies on deck.

Investors will also get a flurry of economic reports, including durable goods, new home sales, unemployment claims, and consumer sentiment, as well as the release of the minutes from the last Federal Reserve meeting.

The week ahead is a short one. The market will be closed Thursday for Thanksgiving. On Friday, the stock exchanges will close at 1 pm ET and the bond market will close at 2 pm ET.

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