Inflation will take center stage in a holiday-shortened week with the Friday release of the Personal Consumption Expenditures (PCE) index, showing whether price pressures continued to cool in April. Markets are closed on Monday for the Memorial Day holiday. Investors will be eyeing tech earnings this week, with Salesforce (CRM) and Dell (DELL) likely to grab attention. Retail will also be in the spotlight as Costco (COST) and Dollar General (DG) are among the companies in that sector to report this week.

Housing market data and consumer confidence are also on tap, and it’s the last week of comments allowed from Federal Reserve officials before the blackout period ahead of their next meeting.

Inflation in Focus as Markets Watchers Eye Interest Rates
Investors will be closely watching the Friday release of the PCE index to see whether inflation is working its way toward the Federal Reserve’s annual goal of 2%. Fed officials have said they want to see more progress on inflation before they can move to cut interest rates from their current elevated levels and got some good news in the April reading of the Consumer Price Index (CPI). Both indexes measure inflation, however, PCE is more closely followed by the Federal Reserve, as its year-over-year tracking of price increases is the measurement used to measure inflation against its target rate of 2%. So far this year, the PCE has edged upward, coming in at 2.7% in March.21

Markets have moved on interest rate signals and another positive inflation reading for April could have investors believing Fed officials may begin to talk about cutting rates again. But if PCE shows another increase in price pressures, investors should expect more “higher for longer” sentiments from officials. It’s not the only potentially market-moving data release or event this week.
A handful of Federal Reserve speakers are on the calendar, with Friday being the last day before the blackout period around Federal Open Market Committee (FOMC) meetings. Market watchers will also be following revisions to U.S. gross domestic product (GDP) for the 2024 first quarter, with data on consumer confidence and the housing market also likely to attract attention.

Salesforce, Costco Feature in Week of Tech, Retail Earnings
Corporate earnings reports will be in the spotlight again, with market watchers likely to focus their attention on financial updates from several big tech, retail, and financial firms. Salesforce, fresh off an earnings beat in its prior quarter, will report on Wednesday, coming as the company is in talks to acquire data management software provider Informatica (INFA). Earnings from Dell will show if the computer maker can continue to benefit from demand for artificial intelligence (AI), while HP is looking to show it can use the same AI demand to turn around sluggish sales.

A string of retailers will report this week, highlighted by Costco Wholesale, which reports after its revenue growth last quarter disappointed some investors. Dollar General, Dick’s Sporting Goods, Abercrombie & Fitch, and Chewy will also issue quarterly financial results this week. Investors will be able to get a look at the banking system north of the border, with Royal Bank of Canada and Scotiabank among the Canadian financial institutions scheduled to report this week. Other noteworthy earnings this week include restaurant chain Cava and personal watercraft maker BRP.