The quiet summer trading season has been marked by exceptionally tight trading ranges; the S&P 500 Index has traded between 2160 and 2190 on all but a handful of days. The low volatility trend should continue this week ahead of the Labor Day weekend. Nevertheless, the market is within 1 percent of its all-time high.
Friday’s release of the monthly non-farm payroll and unemployment figures from the Bureau of Labor Statistics (BLS) will be the last employment report before the Fed’s September meeting. Fed Vice Chairman Stanley Fischer indicated last week that the jobs report could weigh heavily on interest rate decisions. While the majority of analysts are not expecting a September hike, odds more than doubled to over 30 percent following the Jackson Hole statements and on Monday, the futures market odds of a December hike were already at 60 percent.
Other reports this week will include Personal Income and Outlays, the ISM and Markit Purchasing Managers’ Indexes (PMIs), weekly unemployment numbers and the latest light vehicle sales figures. July personal incomes and expenditures hit analyst expectations as auto sales lifted consumer spending. Income growth accelerated slightly faster than spending, pushing the savings rate up to 5.7 percent. Analysts believe PMIs will continue to reflect expansion, though at be marginally lower levels than last month. August light vehicle sales are expected to hit an annualized pace of 17.1 million, down from 17.8 million in July. Pending home sales for July and the latest S&P/Case-Shiller housing report will be out on Tuesday. The most recent U.S. trade balance figures will be released Friday.
Overseas, Chinese manufacturing and nonmanufacturing PMIs are expected to show an economic slowdown. Eurozone PMIs and Eurozone business confidence are expected to show a slight decline from the prior month. Rumors of more stimulus from the Bank of Japan could also affect markets this week, though the BoJ is not scheduled to meet until September 21.
Abercrombie & Fitch (ANF) and leisure athletic apparel company lululemon (LULU) will report earnings this week. Analysts expect ANF will report a net loss per share and LULU a 10 percent increase in earnings. In the tech sector, investors will hear from Saleforce.com (CRM) and Broadcom (AVGO). CRM’s earnings and revenues are expected to indicate quarter-over-quarter growth as the company expands into markets dominated by larger firms, such as Oracle (ORCL).
Other widely-held companies reporting this week include Campbell Soup (CPB) and H & R Block (HRB). Analysts expect earnings per share growth from CPB and a loss at HRB.