With December under way, Wall Street might begin counting down the number of shopping days left — not until the holidays, but until retailers can say with certainty how the shopping season fared and whether consumer spending held up as hoped.
Investors have received mixed signals on the health of retailers and consumers in general recently and in the coming week will be eyeing reports on factory orders as well as unemployment to gauge whether the economy is headed toward a soft landing as many hope following more than two years of interest rate hikes.
Strong consumer spending has been a pillar of the robust economic growth seen in recent years, but uneven reports from retailers raised questions about whether consumers will deliver for Wall Street this year. Last week, Wal-Mart Stores Inc. surprised investors by posting a drop in its November same-store sales, a primary retail measure reflecting sales at stores open at least a year. It was the first decline in a decade for the world’s largest retailer.
As it seeks more data on how consumers are faring, Wall Street will no doubt take note of Friday’s employment report from the Labor Department, particularly the government’s jobs creation figure. Weekly unemployment claims rose unexpectedly last week to a 13-month high, causing some concern about the direction of the economy. While unemployment has been near five-year lows recently, a spike in jobless claims could signal businesses are cutting back ahead of an expected downturn.
Some on Wall Street keeping tabs on retailers are also watching the housing sector, wondering whether consumers might pare spending at the mall if they have concerns about falling home values. Investors have been wondering whether the well-documented slowdown in housing might pull the economy into recession or perhaps merely serve as a drag on growth. A quarterly report from upscale homebuilder Toll Brothers Inc. this week could lend some additional insight into the state of the sector.
In any case, investors will be hoping for a better week. Last week, the markets gave up ground, with the Dow Jones industrial average losing 0.70 percent. The Standard & Poor’s 500 index fell 0.30 percent, while the Nasdaq composite index lost 1.91 percent.
Economic data
On Tuesday, the Labor Department reports revised productivity figures for the third quarter, though Wall Street isn’t expecting a sizable change.
Also Tuesday, the Commerce Department reports factory orders for October, and the Institute for Supply Management issues its services sector business index. That follows an important report Friday, November’s ISM manufacturing figure, which showed the first decline in manufacturing in more than three years.
Thursday brings weekly data on weekly jobless claims. Later that day, the Federal Reserve is expected to release its consumer credit report for October, a sometimes volatile reading of consumer debt.
Friday brings the Labor Department’s November employment report, which includes the number of jobs created, average hourly earnings and the unemployment rate. The jobs creation figure often draws interest as it indicates the degree to which the economy might be growing or contracting.
The day also brings the University of Michigan’s preliminary consumer confidence reading for December. The mood of consumers is of particular concern to Wall Street during the holidays because a strong showing in either direction could signal how retailers might make out during what is for many the most important selling period of the year.
Earnings
The earnings schedule is light for the week and gets started Tuesday with a third-quarter report from grocer Kroger Co., which is expected to earn 28 cents per share. The company, which has traded between $18.05 and $24.15 in the past 52 weeks, closed Friday at $21.65.
Wall Street also expects to hear from Toll Brothers Inc. Tuesday and predicts the company will earn $1.06 per share for its fiscal fourth quarter. The stock closed Friday at $32.16 and has traded between $22.22 and $39.98 in the past 52 weeks.
The same day, Novell Inc., which makes open-source software, including a version of the Linux operating software, plans to report its fiscal fourth-quarter results. Wall Street is expecting a profit of 4 cents per share. The stock closed Friday at $6.29 and has traded between $5.73 and $9.83 in the past 52 weeks.
On Thursday, National Semiconductor Corp. is seen as reporting fiscal second-quarter earnings of 27 cents per share. The chip maker, which has traded between $20.56 and $30.93 in the past 52 weeks, closed Friday at $24.17.