Investors have turned a bit cautious. The broad-based S & P 500 index and the tech-heavy Nasdaq Composite both posted their second consecutive losing weeks, while the Dow Jones Industrial Average eked out a slight gain. While the selling could be nothing more than investors locking in gains after a strong rally this year, there is also some worry that the economy has yet to feel the full impact of the Federal Reserve’s tightening efforts. That unknown is likely pushing many to reduce exposure to riskier growth assets until it’s clear the central bank has pulled off a so-called soft landing — or has managed to stomp out inflation while avoiding a recession altogether. More bad news out of China, the world’s second-largest economy, certainly isn’t boosting optimism on the Street. This week, we learned China’s consumer prices fell in July for the first time in two years. This is raising worries as many U.S. companies were looking for China’s reopening from the pandemic to drive a rebound in sales. Our August Monthly Meeting is this Thursday, Aug. 17, when we will run through every position in the portfolio. Here are two more important things to know for the week ahead. 1. State of the consumer: Retail sales for July are out on Tuesday. The June release came out weaker than expected, though we did see some notable strength in e-commerce. Investors are likely prepared for some weakness, but what we don’t want to see is a number that is so hot versus expectations that it sparks inflation fears — or so weak (think negative) that it raises concerns that the Fed has overtightened and the consumer is getting crushed. The Fed may be on the verge of a pause in raising interest rates, but the lagged effect of monetary policy means that we still haven’t truly felt the impact of the last few hikes. Key retail earnings reports from Walmart (WMT), Target (TGT) and Tapestry (TPR) will also provide clues on the health of the consumer. We’ll also hear from Home Depot, which along with the report on housing starts and building permits Wednesday, will show us the state of the real estate industry. This is a key consideration as shelter costs have been a sticky source of inflation that we know the Fed is closely monitoring as it works to determine if any further hikes are warranted. 2. Earnings : On Wednesday morning, we hear from Club holding TJX Companies (TJX). Prior retail sales data has shown monthly sales growth at clothing and clothing accessory stores accelerate throughout the quarter, rising 0.14% monthly in April, 0.3% in May and 0.6% in June. As a result, we feel pretty good about the demand environment in the second quarter. On the supply side, analyst checks in recent weeks have talked about TJX having some of the highest-quality inventory they have ever seen. As a result, the key question will be margins. We’re looking for management to reiterate its forecast to achieve a 10.6% pre-tax profit margin target by fiscal 2025, a level not seen since before the pandemic. On Friday morning, we hear from Estee Lauder (EL). As we’ve said over the past few weeks, we don’t have high hopes for the reported quarter. Recent news that China has lifted a ban on group tours to more than 70 locations could help the pace of the recovery. However, this news likely won’t have a positive material impact on the current quarter and could mean another guidance cut. Finally, we’ll hear from Palo Alto Networks (PANW) on Friday after the closing bell. The timing of the report has some investors on edge, with the thinking that the only reason to report on a Friday evening is to unload some bad news. However, the company has said that it’s due to scheduling conflicts. The recent earnings release from Fortinet (FTNT), in which management said deals were being delayed and cut its full-year guidance has reduced expectations and PANW’s stock price. Analysts have already come out ahead of the print expressing their view that the near term is rocky and lowered estimates. But the Street remains bullish over the longer term thanks to Palo Alto’s wide breadth of offerings, putting it in a position to gain market share as customers look to consolidate their security needs on one platform. In addition to earnings, the team will provide an update on medium-term financial targets through fiscal year 2026. The call is expected to go longer than your typical earnings call and encompass everything from a review of company strategy to financial objectives and the market opportunities. For those looking to review first-quarter performance ahead of these releases, be sure to keep our first-quarter earnings report card handy. And in case you missed it: These are the six trades and the two price-target changes the Club made this week. Here’s the full rundown of all the important domestic data in the week ahead. Monday, August 14 Before the bell: JinkoSolar (JKS), Embraer (ERJ), monday.com (MDNY) After the bell: Suncor Energy (SU), Canoo (GOEV), Getty Images (GETY) Tuesday, August 15 8:30 a.m. ET: Retail sales Before the bell: Home Depot (HD), Sea Ltd. (SE), On Holding (ON), Cardinal Health (CAH), Tencent Music (TME) After the bell: Nu Holdings (NU), Agilent (A), Coherent (COHR), H & R Block (HRB), CAVA Group (CAVA) Wednesday, August 16 8:30 a.m. ET: Housing starts & building permits 9:15 a.m. ET: Industrial production & capacity utilization Before the bell: TJX Companies (TJX) , Target (TGT), ZIM Integrated (ZIM), JD.com (JD), Brinker (EAT), Performance Food Group (PFGC), Colgate-Palmolive (CL) After the bell: Cisco Systems (CSCO), Synopsys (SNPS), Chemical & Mining (SQM) Thursday, August 17 8:30 a.m. ET: Initial jobless claims Before the bell: Walmart (WMT), Dole (DOLE), Tapestry (TPR), Bilibili (BILI) After the bell: Applied Materials (AMAT), Keysight Technologies (KEYS), Ross Stores (ROST), Bill.com (BILL), Farfetch (FTCH) Friday, August 18 8:30 a.m. Before the bell: Estee Lauder (EL) , Deere & Company (DE), Xpeng (XPEV), Bipshop (VIPS) After the bell: Palo Alto Networks (PANW) (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
People shop in a Manhattan store on July 27, 2023 in New York City.
Spencer Platt | Getty Images
Investors have turned a bit cautious. The broad-based S&P 500 index and the tech-heavy Nasdaq Composite both posted their second consecutive losing weeks, while the Dow Jones Industrial Average eked out a slight gain.
While the selling could be nothing more than investors locking in gains after a strong rally this year, there is also some worry that the economy has yet to feel the full impact of the Federal Reserve’s tightening efforts. That unknown is likely pushing many to reduce exposure to riskier growth assets until it’s clear the central bank has pulled off a so-called soft landing — or has managed to stomp out inflation while avoiding a recession altogether.
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