The Dow Jones index of 30 industrial stocks is the bellwether for US stocks. This week, retail sales are released for the economy.
The index has been on a strong rally over the last weeks and will now turn to retail sales as an essential indicator.
US30 – Weekly Chart
US stocks are approaching a 34,275 resistance level, which is the first target for the week. Getting above that level would target the 36-37,000 area in the Dow.
Retail sales have been on a downward slump over the last months, culminating in a zero-growth figure the previous month. This month is expected to return to growth with a 1% print.
According to the BLS, futures markets were higher after PPI numbers, which showed a drop in price pressures. Core PPI showed a sharp decline from last month’s 0.2% increase and well below the 0.3% forecast.
This followed a softer CPI number and hints that the Federal Reserve’s aggressive interest rate hikes have worked. It also highlights that they may have room to slow the pace of rate hikes in the months ahead.
“The issue the market has to wrestle with is how long is the Fed going to keep rates at that level and I think there is some positive sentiment out there that the Fed is going to pivot sometime in 2023,” Peter Kraus, CEO at Aperture Investors, said on Bloomberg Television.
US stocks also got a boost from strong company earnings, with Walmart being one of the highlights. The retail giant reported blowout results with beats across the board and lifted its sales and EPS forecasts. Walmart forecasted a smaller than previously predicted fall in annual profit as demand for groceries remained strong despite higher prices. At the same time, discounts on clothing and electronics attract more inflation-hit shoppers to stores.
