Investors will receive another heavy wave of potential market-moving events in the week ahead, as the nearing holiday season is likely to spur skeletal staffing at most financial sector firms.

The heavy calendar includes the minutes from the Federal Open Market Committee’s (FOMC) most recent two-day meeting, as well as updates on the nation’s housing and manufacturing activity.

A recent cooling in the U.S.-China trade battle, as well as some healthy financial results – especially in the semiconductor space – combined with continued strength in the retail sector and an upbeat October employment report, has sent stocks skyrocketing ahead of the weekend.

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The S&P 500 reached a new record high intraday Friday, highlighted by a surge of nearly 8.9% in the shares of chip-maker Applied Materials (NASDAQ: AMAT), which generally reignited confidence in the semiconductor business with its upbeat earnings and outlook.

The S&P has risen over 24.15% year-to-date and has gained almost 32.5% from its latest 52-week low set on December 24, 2018.

The yield on the 10-year U.S. Treasury note also remained elevated at around 1.83% intraday Friday, an increase of roughly 35bps from its recent low set at the start of September.

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FED

The week ahead is likely to pose few surprises on the monetary policy front, with the FOMC set Wednesday to release the minutes from its two-day meeting that ended with a 25-basis point rate cut on October 30.

Federal Reserve chair Jerome Powell has said that the committee views “the current stance of policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent” with its outlook.

Investors have been generally scrutinizing the FOMC for their stance on monetary policy this past year, after U.S.-China trade tensions, slowing global growth, weak domestic fixed investment and sluggish inflation helped reverse their hawkish agenda – and instead spurred a trio of rate cuts.

To date, the latest decision by the FOMC to slash the target range for the federal funds rate by another 25bps to 1.50%-1.75% is widely expected to remain in place, at least through year-end.

Recent quotes about the future implied probability the central bank will elect to cut rates by an additional 25bps at the conclusion to its two-day monetary policy meeting on December 11 were just north of 4.0%, with an overwhelming majority of just over 95.5% anticipating no change.

Meanwhile, Powell had essentially reiterated his views on the economy in his congressional testimony this past week, attributing slowing U.S. growth in part to “weakness in business investment, which is being restrained by sluggish growth abroad and trade developments.”

These factors have taken a toll on exports and manufacturing in 2019, as the rate of gross domestic product growth (GDP) has slowed to 1.9% in the third quarter from 2.5% last year and in the first half of this year.

However, the Fed chair also highlighted domestic strengths, as “household consumption has continued to rise solidly, supported by a healthy job market, rising incomes, and favorable levels of consumer confidence.” Also, “reflecting the decline in mortgage rates since late 2018, residential investment turned up in the third quarter following an extended period of weakness.”

Still, some concerns shifted to the fore, as repo markets appear to face continued pressure, and the federal debt has mushroomed.

Analysts at Janney Montgomery noted that among Powell’s comments there were “worries about the growth in U.S. debt outpacing GDP (albeit ‘far off’ worries), but hopefulness that the slowdown in manufacturing may be contained and not have contagion effects.”

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Powell had also warned about the effectiveness of fiscal policy to support the economy in a downturn, citing the Congressional Budget Office’s recent long-term budget outlook that the federal budget is “on an unsustainable path, with high and rising debt.” The Fed chair added that he remains “concerned that high and rising federal debt can, in the longer term, restrain private investment and, thereby, reduce productivity and overall economic growth”.

HOUSING

Against this backdrop, fresh figures on existing home sales for October are set Thursday to cross the wires after they fell 2.2% month-over-month to an annual rate of 5.38 million in September.

Lawrence Yun, the National Association of Realtors’ (NAR’s) chief economist, said that despite historically low mortgage rates, sales have not commensurately increased, in part due to a low level of new housing options.

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Yun, who has called for additional home construction for over a year, said that home prices are “rising too rapidly because of the housing shortage, and this lack of inventory is preventing home sales growth potential.”

Total housing inventory at the end of September sat at 1.83 million, about equal to the amount of existing homes available for sale in August, but a 2.7% decrease from 1.88 million one year ago.

According to Bankrate, rates on 10-, 15- and 30-year fixed-rate mortgages were around 3.15%, 3.17%, and 3.73%, respectively.

MANUFACTURING & SERVICES

Elsewhere, IHS Markit will unveil flash readings of its manufacturing, services and composite Purchasing Managers’ Indexes (PMIs) for November after some mixed news in the prior month.

While domestic manufacturing activity staged a modest improvement in October – bolstered by faster expansions in output and new business – U.S. service providers reported a further slowdown in business growth, as new business stagnated and export demand continued to drop.

The IHS Markit final U.S. Manufacturing PMI rose to 51.3 in October from 51.1 in the prior month – the highest level since April. However, the overall rate of growth remained well below the long-run series average.

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Chris Williamson, a chief business economist at IHS Markit said that tentative signs of “renewed vigor are appearing in the U.S. manufacturing sector, with the survey’s production gauge having now risen for three successive months to suggest that the soft patch bottomed out in July.”

He added that growth of new orders “hit a six-month high, fueled in part by a renewed increase in exports, prompting producers to take on more staff, with payroll numbers rising at the quickest pace since May.”

Also, the IHS Markit U.S. Services Business Activity Index registered 50.6 in October, down slightly from 50.9 in the previous month and downwardly revised from the flash figure of 51.0.

The Business Activity Index’s marginal expansion was the weakest since early-2016 and resulted in the sharpest decrease in workforce numbers since December 2009. Despite the gloomy picture, IHS Markit observed that firms held a “slightly more upbeat outlook” for the year ahead.

RETAIL EARNINGS

With a rosier landscape for economic growth seeping to the fore, a large wave of retail sector firms are set to deliver their latest quarterly earnings, including Home Depot (NYSE: HD), Target (NYSE: TGT), Gap (NYSE: GPS), Nordstrom (NYSE: JWN) and Macy’s (NYSE: M).

Investors have been generally cautious about retail, amid uncertainties over the impacts of tariffs on revenues and profits.

Advance estimates of U.S. retail and food services sales for October rose 0.3% from the previous month to US$526.5bn and were up 3.1% year-over-year.

Jefferies economists Ward McCarthy and Thomas Simons noted that the bottom line on this data release is that “consumer spending became more tempered in late Q3 and early Q4,” adding that the “underlying fundamentals of the consumer sector continue to be quite positive and the consumer sector will continue to be a source of growth going forward.”

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On the Calendar:

Monday, November 18

• National Association of Home Builders (NAHB) Housing Market Index (Nov)

Tuesday, November 19

• Housing Starts (Oct)
• American Petroleum Institute (API) Crude Oil Stocks
• Home Depot (HD) Earnings (Q3’19)
• Kohls (KSS) Earnings (Q3’19)
• TJX Companies (TJX) Earnings (Q3’19)

Wednesday, November 20

• U.S. Energy Information Administration (EIA) Crude Oil Stocks
• Federal Open Market Committee (FOMC) Meeting Minutes (from October 29-30)
• Jack In The Box (JACK) Earnings (Q4’19)
• L Brands (LB) Earnings (Q3’19)
• La-Z-Boy (LZB) Earnings (Q2’19)
• Lowe’s Companies (LOW) Earnings (Q3’19)
• Target Corp (TGT) Earnings (Q3’19)

Thursday, November 21

• Phili Fed Manufacturing Index (Oct)
• Existing Home Sales (Oct)
• Gap Inc (GPS) Earnings (Q3’19)
• Macy’s (M) Earnings (Q3’19)
• Nordstrom (JWN) Earnings (Q3’19)
• Williams-Sonoma (WSM) Earnings (Q3’19)

Friday, November 22

• IHS Markit Flash PMIs (Manufacturing, Services, Composite – Nov)
• University of Michigan Consumer Sentiment (Final – Nov)
• Foot Locker (FL) Earnings (Q3’19)
• J M Smucker (SJM) Earnings (Q2’19)

In the meantime, select the Event Calendar option in the IBKR Trader Workstation for a full list of the U.S. and global corporate events and earnings, dividend schedules, economic data, IPOs and more.