What do you know this week?

The S&P 500 (^GSPC) closed above 5,000 points for the first time ever on Friday as the three major averages posted a positive week for the 13th time in the last 14 weeks.

With few economic catalysts in the past week, investors have been digesting a slew of better-than-expected corporate results. Meanwhile, Fed officials' comments largely reiterated the central bank's position that more confidence in inflation's downward path is needed.

The week will bring new challenges to the market rally, with a new reading on inflation and consumer spending highlighting the economic calendar. On the corporate side, about 15% of the S&P 500 is scheduled to report earnings headlined by John Deere (DE), Coinbase (COIN), Airbnb (ABNB), and Shopify (SHOP).

Check price

On Tuesday morning, investors will be released the Consumer Price Index (CPI) for January. Wall Street expects a 2.9% annual increase for the headline CPI, which includes food and energy prices, a notable decline from the headline figure of 3.4% in December. Prices are expected to rise 0.2% month-on-month, in line with December's rise.

On a “core” basis, which excludes food and energy prices, inflation is expected to rise by 3.7% year-on-year, a slowdown from the 3.9% increase seen in December. Monthly increases in basic prices are expected to reach 0.3%, unchanged from the previous month.

“We expect further commodity contraction this month, driven primarily by weak used car prices,” Diego Anzoategui, an economist at Morgan Stanley, wrote in a note to clients on Thursday. “The gradual slowdown is confirmed, but services inflation remains steady with some slowdown in rental inflation but there is a slight recovery in insurance and hotel rates.”

Consumer status

Part of the soft landing thesis that has gripped markets in the past few months has been consistent, stronger-than-expected data on consumer spending. A new reading of this trend is scheduled to greet investors on Thursday with the January retail sales report. Economists expect retail sales to decline by 0.2% in January compared to the previous month.

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Bank of America economist Michael Gaben expects a “soft” reading due to seasonal factors and widespread winter storms that will likely disrupt retail spending in January. But Jabin doesn't think this changes the overall consumer narrative.

“Excluding noise, the consumer looks healthy, with upside risks to spending from an acceleration in real wages,” Jabin wrote in a note to clients.

A measure of real wages, the Gabin measure, which is the pay Americans see after subtracting headline inflation from wage growth, was recently listed in the Yahoo Finance Chartbook as a reason the U.S. economy is avoiding a recession amid rising interest rates.

A final look at traditional cars

After Tesla (TSLA)'s earnings report disappointed investors, traditional automakers Ford (F) and GM (GM) surprised by rising. Stellantis (STLA), the parent company of Chrysler and Fiat, will report on Thursday, making it the last of the big three automakers to report earnings this cycle.

Yahoo Finance Pras Subramanian Reports: While the United Auto Workers (UAW) strike lasting into October will likely impact operating margins, Stellantis is expected to see revenues jump more than 5% to €189.3 million, and adjusted net income to rise 9.7% on Annual basis to 18.4 billion euros. Euros, according to Bloomberg estimates.

Stellantis CEO Carlos Tavares has been criticized in the past for not moving faster with the company's shift to electric vehicles. Now he seems prescient as demand for electric vehicles appears to have waned in recent months. Shares of Big Three automakers Ford and General Motors rose after strong earnings reports, with the Michigan-based automakers' traditional gas-powered businesses forecasting strong 2024 earnings.

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Investors will be looking for Stellantis to deliver more of the same with expectations of earnings growth and capex for electric vehicles.

Expansion of profits

Broadly earnings have been increasingly positive. With 75% of S&P 500 companies Following the earnings announcement, the benchmark index is on track to report earnings growth for the second straight quarter. It is worth noting that analysts see continued profit growth throughout the next two years.

In a note to clients on Friday, Pinky Chadha, chief equity strategist at Deutsche Bank, highlighted that 83% of US companies beat earnings estimates. According to Chadha's research, this is the highest mark in two years and “well above the upper end of the pre-pandemic range.” They are also much higher than rates in other countries, which may be an indication of why US stocks are outperforming other markets.

“Such high pulses have historically only been seen in the early stages of recovery from a major cyclical downturn,” Chadha wrote.

Several strategists recently noted a similar trend to Yahoo Finance when explaining how the S&P 500 could rise to new highs later this year without significant contributions from a few large technology stocks that have been driving the market's movement of late.

“As investors stop worrying so much about exactly when the Fed is going to start cutting interest rates, I think we're going to see a lot of these companies outside of the Big 7 have very strong earnings growth, and that will do very well next year. In turn, Ben Snyder, equity strategist at Goldman Sachs, told Yahoo Finance.

Weekly calendar

Monday

Economic Data: New York Fed One-Year Inflation Forecast, January (previously 3.01%)

Earnings: Avis Budget Group (CAR), Monday.com (MNDY), Waste Management (WM), Zoominfo Technologies (ZI)

Tuesday

Economic Data: NFIB Small Business Optimism Index, January (91.9 previously), CPI, Monthly, January (+0.2% expected, +0.3% previously); Core CPI, MoM, January (+0.3% expected, +0.3% previously); CPI, YoY, January (+2.9% expected, +3.4% previously); Core CPI, YoY, January (+3.7% expected, +3.9% previously); Real average hourly earnings, year-on-year, January (+0.8% previously)

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Earnings: Airbnb (ABNB), AutoNation (AN), Biogen (BIIB), Coca-Cola (KO), Datadog (DDOG), Hasbro (HAS), Instacart (CART), Marriott International (MAR), Lyft (LYFT), MGM Resorts (MGM), Moody's (MCO), Robin Hood (HOOD), Shopify (SHOP), Upstart (UPST), Zillow Group (ZG)

Wednesday

Economic Data: MBA Mortgage Applications, Week Ending February 9 (+3.7%)

Earnings: Albermarle (ALB), Cisco (CSCO), CME Group (CME), Generac (GNRC), Kraft Heinz (KHC), Occidental (OXY), Sony (SONY), Sunoco (SUN), Twilio (TWLO)

Thursday

Economic Data: Initial Jobless Claims, week ending February 10 (previously 218,000); Retail Sales, MoM, January (-0.2% expected, +0.6% previously); Retail sales excluding automobiles and gas, January (+0.2% expected, +0.6% previously); Import Prices, Monthly, January (-0.1% expected, +0.0% previously); Export prices, month-on-month, January (-3.2% previously); Industrial Production, MoM, January (+0.4% expected, +0.1% previously); NAHB Housing Market Index, February (previously 44)

Earnings: Applied Materials (AMAT), Coinbase (COIN), Crocs (CROX), DoorDash (DASH), DraftKings (DKNG), John Deere (DE), Penn National (PENN), Oatly (OTLY), Roku (ROKU), Stellantis ( STLA), Trade Desk (TTD), Toast (TOST), Wendy's (WEN), Yeti (YETI)

Friday

Economic Data: Producer Price Index, Monthly, January (+0.1% expected, -0.1% previously); Producer Price Index, y/y, January (previously +1%); University of Michigan Consumer Confidence, preliminary February reading (79.0 expected, previous 79.0); Building Permits Monthly, January (1.5% expected, 1.8% previously)

Earnings: Air Canada (ACDVF), Cinemark (CNK)

Josh Schaeffer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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