Wall Street Week Ahead - Inflation Data, Earnings Season, and Market Trends

Wall Street braces for a volatile week ahead as inflation data, earnings reports, and market trends shape investor sentiment and Fed rate expectations.

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•  Feb 16 2025
 

Wall Street Week Ahead is shaping up to be a crucial one, with investors closely watching key economic data and earnings reports. Last week, inflation data surprised to the upside, with the Consumer Price Index (CPI) rising 0.5% in January—its highest monthly increase in a year and a half.

Core inflation came in at 0.4%, also above expectations. The inflation figures now put the annual rate at 3.0% overall, while core inflation sits at 3.3%. The Producer Price Index (PPI) also showed continued price pressures, rising 0.4% for the 13th consecutive month, further fueling concerns about inflation persistence.

Wall Street Week Ahead is shaping up to be a crucial one, with investors closely watching key economic data and earnings reports. Last week, inflation data surprised to the upside, with the Consumer Price Index (CPI) rising 0.5% in January—its highest monthly increase in a year and a half.

Core inflation came in at 0.4%, also above expectations. The inflation figures now put the annual rate at 3.0% overall, while core inflation sits at 3.3%. The Producer Price Index (PPI) also showed continued price pressures, rising 0.4% for the 13th consecutive month, further fueling concerns about inflation persistence.

The inflationary pressures are largely driven by energy and service costs. Gasoline prices surged 1.8%, reflecting the impact of global oil market fluctuations and geopolitical tensions, particularly sanctions on Russia. Additionally, housing costs saw a 0.4% increase, adding to the upward pressure on inflation. Used car prices unexpectedly spiked by 2.2%, and transportation services saw an unusual jump of 1.8%, with car insurance costs playing a significant role. Airfare also increased by 1.2%, following a 3.0% rise in the previous month, marking a 7.1% gain over the past year.

Violeta Todorova, a research analyst at Leverage Shares, points out that U.S. inflation is being reignited by Trump-era economic policies. The surge in food and energy prices has raised concerns that inflationary cooling might be slower than anticipated. However, the Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures (PCE) index, is expected to show a more moderate rise. The uncertainty surrounding tariffs and protectionist policies has added another layer of complexity.

If Trump's tariff plans on aluminum, steel, and oil imports materialize, they could further fuel price increases in various sectors. Market expectations for interest rate cuts have also shifted, with futures now pricing in just one rate cut in 2025, though some analysts believe the Fed may implement two cuts in September and December.

Paul Marino, Chief Revenue Officer at Themes ETF's, highlights that trade policies remain a significant concern for investors. The focus is now shifting to Europe, as Trump's next target for tariffs could be U.S. allies. Last week, Trump announced retaliatory tariffs on any country that imposes duties on American imports, aiming to "level the playing field" in global trade.

Investors are watching whether these tariffs will ultimately lead to more favorable trade terms or further economic strain. Meanwhile, Walmart's earnings report, due this week, will provide insights into how inflation is affecting U.S. consumer spending and demand trends. Additionally, the Federal Reserve’s meeting minutes will be closely analyzed for any signals on future monetary policy.

Earnings season continues, with several major companies set to report their quarterly results. Among the key names releasing earnings this week are Baidu, Medtronic, SolarEdge, Wix, Fiverr, Sapiens, NICE, Walmart, and Alibaba. So far, over 70% of S&P 500 companies have reported earnings, with 70% beating revenue expectations and 80% exceeding profit forecasts.

Revenue growth stands at 5.2%, while earnings growth has reached 11%, surpassing earlier estimates of 8%. This quarter’s earnings performance marks the highest year-over-year growth rate since 2021.

The financial and consumer discretionary sectors have been standout performers, exceeding profit expectations by 10% and 15%, respectively. On the other hand, the energy, materials, and industrial sectors reported weaker results. Tech giants have delivered mixed results, with cloud computing revenues coming in softer than expected due to a shortage of computing power. Companies in the sector have emphasized the need for continued investment to sustain growth.

Currently, the S&P 500's forward price-to-earnings ratio stands at 22.1, above its five-year average of 20 and its ten-year average of 18.2. One of the most frequently mentioned terms in earnings calls has been "tariffs," indicating that trade policies are a growing concern among corporate executives. With inflation still elevated and trade tensions looming, investors are preparing for another eventful Wall Street Week Ahead.

What Are Wall Street Analysts Expecting?

Several major companies are set to release their earnings reports this week, with analysts closely watching key financial metrics. Here’s what they anticipate:

Sapiens $SPNS will report earnings on Tuesday before the market opens. Analysts project Q4 revenue of $135.89 million and full-year 2024 revenue of $543.91 million. Expected earnings per share (EPS) stand at $0.36 for Q4 and $1.47 for the full year.

SolarEdge $SEDG is scheduled to announce results on Wednesday before the market opens. Analysts forecast Q4 revenue of $189.23 million and full-year 2024 revenue of $920.84 million. The company is expected to post a loss of $1.63 per share in Q4, with a projected annual loss of $19.28 per share for 2024.

Wix.com $WIX will release its earnings report on Wednesday before the market opens. Analysts estimate Q4 revenue at $461.44 million and full-year 2024 revenue at $1.76 billion. Expected EPS stands at $1.61 for Q4 and $6.05 for the full year.

Fiverr $FVRR is also set to report earnings on Wednesday before the market opens. Analysts predict Q4 revenue of $101.39 million and full-year 2024 revenue of $389.2 million. EPS expectations are $0.68 for Q4 and $2.39 for the full year.

NICE $NICE will announce its earnings on Thursday before the market opens. Analysts expect Q4 revenue of $715.26 million and full-year 2024 revenue of $2.73 billion. EPS projections stand at $2.95 for Q4 and $11.05 for the full year.

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Please note that the article should not be considered as investment advice or marketing, and it does not take into account the personal data and requirements of any individual. It is not a substitute for the reader's own judgment, and it should not be considered as advice or recommendation for buying or selling any securities or financial products.