This week is a shortened trading week with major markets closed Monday in observance of the Memorial Day holiday. Investor focus will remain on the coronavirus and its impact on the U.S. economy as most states across the country continued their phased reopening plans.

Key economic reports to watch include the Conference Board Consumer Confidence Index reading for May, April new home sales and the Federal Reserve’s Beige Book. There will also be several retailers gearing up to report quarterly results this week.

Consumer confidence

Economists expect that consumer confidence stabilized to 87.5 in May following a record decline in April to 86.9. The preliminary University of Michigan sentiment survey showed a modest rebound in May; however, Nomura economist Lewis Alexander warned that still elevated weekly jobless claims data suggested that labor market deterioration continued in May.

Alexander pointed out that consumer confidence is more highly correlated to the unemployment rate. “Weekly measures of consumer confidence indicate further deterioration through May, suggesting some room for the Conference Board’s measure to fall,” Alexander said in a note May 22. “As more states gradually ease social distancing measures, re-hiring will likely pick up over coming months. The stabilization of the labor market may help support consumer confidence from dropping further.”

New home sales
While new homes sales in April are expected to have plunged 20.3% from March, some economists think that the coronavirus’ impact on the U.S housing sector will not be as bad as other parts of the economy.

“Housing had a lot of momentum heading into the COVID-19 crisis. Even with the March drop, new home sales are running 6.7% ahead of their year-ago pace,” Wells Fargo wrote in a note May 22. “While shutdown orders and social distancing have brought challenges for builders and buyers, it is possible that the housing market could pick back up as states begin to re-open.”

The firm argued that of the millions of Americans that have lost their jobs over the past two months or so, few of them were prospective home buyers. Furthermore, mortgage applications for home purchase have bounced back as of late.

Meanwhile on the earnings calendar, Toll Brothers, Workday, Salesforce, Ulta, Costco and Nordstrom are among the heavyweights reporting quarterly earnings this week.

Economic calendar

Monday: Markets closed in observance of Memorial Day holiday

Tuesday: Chicago Fed National Activity Index, April (-4.19 in March); FHFA House Price Index month-on-month, March (+0.6% expected, +0.7% in February); Conference Board Consumer Confidence, May (87.5 expected, 86.9 in April); New Home Sales, April (500,000 expected, 627,000 in March); New Home Sales month-on-month, April (-20.3% expected, -15.4% in March); Dallas Fed Manufacturing Index, May (-73.7 in April)

Wednesday: MBA Mortgage Applications, week ending May 22 (-2.6% prior); Richmond Fed Manufacturing Index, May (-53 in April)

Thursday: GDP Annualized quarter-on-quarter, Q1 second reading (-4.8% expected, -4.8% prior); Personal Consumption, Q1 second reading (-7.4% expected, -7.4% prior); GDP Price Index, Q1 second reading (1.3% expected, 1.3% prior); Core PCE quarter-on-quarter, Q1 second reading (1.8% prior); Durable Goods Orders, April preliminary (-18.0% expected, -14.7% in March); Durables excluding Transportation, April preliminary (-14.5% expected, -0.4% in March); Capital Goods Orders Nondefense excluding Air, April preliminary (-0.1% in March); Initial Jobless Claims, week ending May 23 (2.438 prior); Continuing Claims, week ending May 16 (25.07 million prior); Bloomberg Consumer Comfort, week ending May 24 (34.7 prior); Pending Home Sales month-on-month, April (-15.0% expected, -20.8% in March)

Friday: Wholesale Inventories month-on-month, April preliminary (-0.8% in March); Personal Income, April (-6.8% expected, -2.0% in March); Personal Spending, April (-12.0% expected, -7.5% in March); MNI Chicago PMI, May (40.0 expected, 35.4 in April); University of Michigan Sentiment, May final (73.7 expected, 73.7 prior)

Earnings calendar

Monday: Markets closed in observance of Memorial Day holiday

Tuesday: AutoZone (AZO) before market open

Wednesday: Ralph Lauren (RL) before market open; Box (BOX), HP Inc. (HPQ), Toll Brothers (TOL), Workday (WDAY) after market close

Thursday: Abercrombie & Fitch (ANF), Burlington Stores (BURL), Dollar General (DG), Dollar Tree (DLTR), Sanderson Farms (SAFM) before market open; Costco (COST), Dell (DELL), Nordstrom (JWN), (CRM), Ulta (ULTA) after market close

Friday: N/A

Author: Heidi Chung

Source: Finance. Yahoo: Consumer confidence, new home sales: What to know in the week ahead

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