The Federal Reserve will take center stage in the coming days as Wall Street attempts to put a mixed week behind it. The Dow Jones Industrial Average on Friday registered its seventh consecutive down session, its longest losing streak since 2020, on its way to falling 1.8% for the week. The S & P 500 also posted a losing week, declining 0.6%. However, the Nasdaq eked out a 0.34% gain thanks to its outsized exposure to large technology stocks. Although it was a relatively light week of economic data, the two main reports — the November consumer price index report Wednesday, and Thursday’s producer price index for November — were significant. They represented the last look at U.S. inflation before the Fed gathers for a two-day policy meeting this week. The CPI, which is the more closely watched of the two readings because it covers prices paid by consumers, matched estimates, up 2.7% on a 12-month basis . A key blemish in the CPI report was the shelter index, which was up 4.7% annually, the latest sign of sticky housing inflation . Meanwhile, the PPI, which offers a look at wholesale inflation, was hotter than expected Thursday, up 0.4% for the month versus the Dow Jones estimate of 0.2% . However, the market still expects to see the Fed cut rates by a quarter percentage point on Wednesday afternoon, which would reduce its target range to 4.25% to 4.5%. Signs of softening in the labor market help support the Fed’s case for lower rates. .SPX .IXIC,.DJI 1M mountain The S & P 500’s one-month performance versus the Nasdaq Composite and Dow Jones Industrial Average. Within the portfolio, the highlight of the week was Thursday night, when Costco posted a strong set of quarterly results and Broadcom delivered an absolute blowout report. Costco offered more evidence that its premium stock valuation is warranted. Broadcom cemented its status as one of the biggest artificial intelligence winners on Wall Street — and joined the vaunted $1 trillion market cap club thanks to a 24.4% surge in Friday’s session. Broadcom was, perhaps unsurprisingly, the top-performing stock in the S & P 500 for the week, gaining 25.2%. That still wasn’t enough to lift the broader tech sector in the green for the week, though. Only two sectors out of the 11 in the S & P 500 ended in positive territory: communication services and consumer discretionary. The performance of communication services was due in large part to a nearly 9% surge in shares of Google parent Alphabet , a Club holding. Investors cheered a breakthrough in quantum computing announced by Google, as well as news that General Motors was bailing on its robotaxi service Cruise , which is good news for Alphabet-owned Waymo . A 12% weekly gain for Tesla shares was the driving force behind the consumer discretionary outperformance. The electric vehicle maker’s stock is now up over 70% since Donald Trump won the presidential election in November. Jim interviewed Trump after he rang the opening bell at the New York Stock Exchange on Thursday and got his thoughts on AI, electricity demand and the equity market overall . Materials, utilities and real estate were the bottom three sectors in the S & P 500 last week, falling 2.9%, 2.7% and 2.4%, respectively. In the week ahead, we’ll get several important updates on the state of the U.S. economy and hear from Fed Chair Jerome Powell after the central bank’s policy decision. No Club names are set to report, but earnings from the likes of home builder Lennar and corporate uniform supplier Cintas will shine additional light on the economy and business backdrop as we head into next year. Don’t forget to mark your calendars: Our Monthly Meeting for December will be live-streamed on the website at noon ET on Wednesday. Economy The big economic update of the week arrives Friday with the release of the November personal spending and income report — and within that, we’ll find the Fed’s preferred measure of inflation, known as the PCE price index . Excluding food and energy prices, economists polled by Dow Jones expect to see a 0.2% month-over-month increase and a 2.9% gain on a 12-month basis. At the headline level, expectations are for a 0.2% monthly gain and 2.5% annual increase. It’s unfortunate these numbers won’t be out until after the Fed’s policy meeting on Wednesday, but then again, we didn’t make the schedule. As mentioned, another quarter-point cut is widely expected. However, it starts to get more uncertain as we look out into next year. Investors will be listening closely to Fed chief Powell’s press conference for clues on what monetary policy in 2025 could look like — it certainly wouldn’t surprise us to hear Powell reiterate that the central bank is not in a hurry to lower borrowing costs, rendering Wednesday’s decision somewhat of a “hawkish cut.” On Thursday, sandwiched between these two events, we’ll get our final update on third-quarter gross domestic product . Economists expect a 2.9% increase in GDP during the July-to-September period, according to Dow Jones. The November retail sales report on Tuesday could provide a bit of insight into Friday’s personal spending reading. The Dow Jones estimate is for a 0.4% month-over-month gain excluding automotive sales. We’ll also get the November capacity utilization and industrial production report on Tuesday, which offers a look into the state of the manufacturing, mining, and electric and gas utilities industries. We’ll also get a trio of updates on the housing market, starting Wednesday morning with November housing starts and building permits followed by the November existing home sales report Thursday. Lennar , one of the nation’s largest home builders, reports Wednesday night, providing a real-time update on the state of the housing market. Lennar’s results and conference call may be more informative than either of these higher-level macroeconomic reports. More on Lennar in a moment. Earnings There’s a few notable companies outside our portfolio reporting that investors should keep an eye on. Indeed, Lennar is one of them. Considering how sticky housing inflation has been, we’re always on the lookout for insights into this market. This time around, we’re interested in what management has to say about consumer behavior following a strange few months for mortgage rates — despite the Fed beginning its cutting cycle in September, borrowing costs to buy homes began to go up. In recent weeks, that upward trend has started to reverse a bit, though mortgage rates do remain prohibitively high for many. Micron also reports after the close Wednesday, giving investors a look at chip demand for both data centers and consumer electronics such as personal computers. Micron makes memory chips for a range of customers, including Club holding Nvidia . Micron’s commentary on PCs will offer a readthrough to Club name Advanced Micro Devices , too. On Thursday morning, we’ll hear from Cintas, which provides items such as uniforms, cleaning products and first-aid supplies to small and medium-size businesses. The company’s exposure to so many industries makes it a barometer for business activity across various sectors of the economy. As Jim has said in the past, “You cannot have a recession if Cintas is blowing the doors open.” Paychex , one of the nation’s largest payroll processors, is another company reporting before the bell Thursday. Like Cintas, Paychex also focuses on small and medium-sized businesses. That makes it uniquely positioned to provide insight into the health of the labor market. Remember, the U.S. is a consumption-driven economy. Low unemployment supports sustained buying power and is therefore key to avoiding a recession. On Thursday evening, we’ll hear from Nike , which can provide a glimpse into the state of the Chinese economy, and from FedEx , which serves businesses in pretty much every economic sector and consumers across the country. That puts FedEx in a position to provide a high-level view of economic activity and demand from both businesses and consumers alike. Week ahead Monday, Dec. 16 No events of note Tuesday, Dec. 17 8:30 a.m. ET: Retail Sales 9:15 a.m. ET: Industrial Production & Capacity Utilization Before the bell: Amentum (AMTM) After the bell: Heico Corp. (HEI) Wednesday, Dec. 18 8:30 a.m. ET: Housing Starts & Building Permits 12 p.m. ET: Investing Club’s Monthly Meeting 2 p.m. ET: Federal Reserve rate decision Before the bell: ABM Industries (ABM), General Mills (GIS), Toro (TTC), Jabil (JBL) After the bell: Micron (MU), Lennar (LEN), MillerKnoll (MLKN), Steelcase (SCS), Worthington Steel (WS) Thursday, Dec. 19 8:30 a.m. ET: Initial Jobless Claims 8:30 a.m. ET: Gross Domestic Price 10 a.m. ET: Existing Home Sales Before the bell: Accenture (CAN), Cintas (CTAS), Darden (DRI), FactSet (FDS), Conagra (CAG), Paychex (PAYX), CarMax (KMX) After the bell: Nike (NKE), FedEx (FDX), BlackBerry (BB), Mission Produce (AVO), Scholastic (SCHL) Friday, Dec. 20 8:30 a.m. ET: Personal Spending & Income Before the bell: Carnival (CCL), Winnebago Industries (WGO) (Jim Cramer’s Charitable Trust is long AVGO, COST, NVDA, GOOGL and AMD. See here for a full list of the stocks.) 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Jerome Powell, chairman of the US Federal Reserve, at Music Hall at Fair Park in Dallas, Texas, US, on Thursday, Nov. 14, 2024.
Shelby Tauber| Bloomberg | Getty Images
The Federal Reserve will take center stage in the coming days as Wall Street attempts to put a mixed week behind it.
