Stock futures opened slightly higher Monday evening, with traders awaiting key new data on the state of the consumer. Contracts on each of the S&P 500, Dow and Nasdaq traded slightly in the green.
Investors are set to receive monthly retail sales data from the Commerce Department Tuesday morning, which will help show how much momentum consumers had heading into the holiday shopping season. The print is expected to show retail sales rose by 1.5% in October compared to September, accelerating from the previous month’s 0.7% clip, according to Bloomberg consensus data.
As usual, the report will be closely monitored as an indicator of overall economic strength, given consumption comprises about two-thirds of U.S. economic activity.
“October was substantially better than September as Delta variant cases eased and the services recovery resumed with credit card and mobility data pointing to another solid gain in control group retail sales,” Sam Bullard, Wells Fargo chief economist, wrote in a note. “Moreover, employment growth was strong last month helping to support our October sales call.”
“All that said, consumer confidence has come under pressure in the face of accelerating inflation as evidenced by last week’s University of Michigan’s sentiment collapse and could present a material headwind to consumer spending as we enter the holiday shopping season,” he added. “On that note, we will keep a close eye to see if consumers pulled forward holiday spending into October from November and December in anticipation of supply chain issues and rising prices.”
Earnings results from retail juggernaut Walmart (WMT) and home-improvement giant Home Depot (HD) are also due for release. Both are also set to show how consumer spending held up on a company-specific basis, and whether supply chain disruptions and rising input costs impacted these companies’ results.
These reports will also come at the tail end of what has already been an exceptionally strong earnings season. As of Friday, 92% of S&P 500 companies had reported actual results, and of these, 81% of them had reported better-than-expected earnings results, according to FactSet.
The slew of better-than-expected corporate profits, coupled with still-accommodative monetary policy support, have helped power stocks to record highs throughout the year, and pushed the S&P 500 up by nearly 25% so far in 2021. These factors have also helped investors continue to push through concerns over persistently elevated inflation — though the stickiness of these rising prices remains a closely watched risk for investors.
“We have a stock market that’s been on an absolute tear despite high inflation,” Michael Darda, MKM Partners chief economist, told Yahoo Finance Live. “That’s not aways been the case historically but it has this time around, and I think for a set of very specific reasons.”
“One is that market interest rates are still extremely low on a historical basis, even though they’re up year-to-date from where they were in January,” he said. “Liquidity levels are high and companies have a lot of pricing power, so profits have been very strong despite those high inflation readings. That doesn’t necessarily mean the market is going to continue to soar on a go-forward basis. I think it’s really going to come down to the future path of market interest rates and how the Fed maneuvers moving forward, because they will be moving into a tightening cycle probably before many forecasters assumed that they would.”
6:15 p.m. ET Monday: Stock futures edge higher as the overnight session kicks off
Here’s where markets were trading Monday evening:
S&P 500 futures (ES=F): +1.75 points (+0.04%), to 4,680.75
Dow futures (YM=F): +16 points (+0.04%), to 36,025.00
Nasdaq futures (NQ=F): +6.5 points (+0.04%) to 16,194.25
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter