Next week, we’ll get more earnings reports from major retailers, with Target, Lowe’s, and Costco scheduled to report. Other companies reporting next week include Salesforce, Zoom Video Communications, Broadcom, Hewlett Packard, Dell Technologies, TD Bank, Best Buy, and AutoZone, among others. Data on January pending home sales will arrive on Monday, followed by the latest updates on national home prices on Tuesday. Purchasing Managers’ Index (PMI) survey readings from S&P Global and the Institute for Supply Management (ISM) will provide the latest information on business conditions in the U.S. The U.S. Supreme Court will also hear two cases that could determine the fate of President Biden’s student loan forgiveness plan.
More Retail Earnings
We’ll get more earnings from major retailers next week, including Target, Lowe’s, Costco Wholesale, Dollar Tree, Kroger, Best Buy, and Nordstrom, among others. Target, the ninth-largest retailer in the U.S. by revenue, is expected to post earnings per share (EPS) of $1.39, which would mark a 55% decrease year-over-year. The company said on Wednesday it plans to invest $100 billion to upgrade its supply chain network to drive online sales and increase its ecommerce presence.
Major retailers have reported solid results so far this earnings season. Walmart reported earnings earlier this week that topped analysts’ estimates, driven by greater spending on necessities and consumer staples. U.S. retail sales surged 3% in January, the Census Bureau reported last week,1 indicating that consumer spending remains strong despite persistently high inflation and the Federal Reserve’s interest rate hikes.
SCOTUS Hearings on Student Loan Forgiveness
On Tuesday, the U.S. Supreme Court will hear two cases that could determine the fate of President Biden’s student loan forgiveness plan. The program was announced on Aug. 24, 2022, and seeks to cancel $10,000 of student loan debt per eligible borrower, or up to $20,000 for Pell Grant recipients. If the Supreme Court upholds the program, more than 40 million borrowers could see part or all of their student loan debt canceled, costing the government $400 billion. If the court blocks the program, however, borrowers could face greater financial hardship in paying down student loan debt compared to before the pandemic amid rising interest rates, particularly once the pause on student loan repayments expires later this year.
Home Prices in Focus
The latest updates on home prices will become available on Tuesday. Index provider S&P Global will release its Case-Shiller National Home Price Index for December, while mortgage originator Freddie Mac will issue its House Price Index tracking prices of single-family homes.
Home prices as measured by the Case-Shiller Index are projected to have fallen 0.7% in December, which would mark the sixth straight month of deflation in prices. Year-over-year, the index is forecast to have risen 6%, decelerating from 6.8% in November and a peak rate of 21.3% in April of last year. This would mark the smallest annual increase since September of 2020. In the most recent report for November, prices in Miami recorded the biggest annual increase at 18.4%, while those in San Francisco were down 1.6% from a year earlier. All 20 metro areas reported month-over-month declines in prices.
Next week, the Institute for Supply Management (ISM) and index provider S&P Global will release Purchasing Managers’ Index (PMI) readings for February, tracking the strength of the U.S. manufacturing and services sectors. The ISM Manufacturing PMI is projected to rise slightly to 47.9, up from 47.4 in January, rebounding slightly after eight consecutive months of declines amid a slowdown in the industrial sector. Any reading below 50 indicates a contraction in business activity. The ISM Non-Manufacturing PMI is projected at 59.2, as services activity remains strong amid a shift in consumer spending preferences from goods to services.