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The Fed’s favorite inflation measure is seen ticking up. (0:17) CoreWeave IPO will gauge AI trade demand. (1:55) GameStop earnings on tap. (2:48)
Investors will be looking through a new lens at the latest income and spending figures out at the end of this week.
Last week Fed Chairman Jay Powell said (tempting fate some would say) that inflation from tariffs would likely be transitory. On Friday, the Fed’s favorite inflation gauge – the core PCE price index – arrives along with the personal spending and income report.
Wells Fargo economists say: “Inflation remains the big hurdle for consumers, and we forecast some sticky price pressures in the February data, which should keep the headline deflator at 2.5% and nudge the core deflator up a tenth to 2.7%.”
But even if the inflation measure comes in hot, traders could give it a pass, assuming that the Fed is already pricing in a tariff boost to prices. The March Summary of Economic Projections showed forecasts for core PCE at 2.8% for this year, up from 2.5% forecast in December.
Markets are still pricing in a quarter-point rate cut in June and are split between two and three cuts for the year.
So, if inflation is losing the wow factor, the attention will likely turn to growth. February durable goods orders arrive Wednesday, with a -1% decline expected in headline and a +0.2% rise in core orders, ex transportation.
Orders shot up in January and for “a manufacturing sector beset by more bad news than good in the past few years, purchasing managers wonder if this is promises of what seemed to be, or a genuine uptick in activity?” Wells Fargo’s team said.
Core “capital goods orders have shown some signs of life more recently, suggesting a more sustained, albeit slower, rebound in activity. It’s hard to see conditions overly supportive of a broad and sustained recovery in capex spending amid elevated uncertainty and still-high rates,” they added.
It’s been a while, but focus this week will also be on the new issues market – with what could a litmus test for tech IPOs and the AI trade.
As listeners heard on Wall Street Lunch last week, CoreWeave (CRWV), a hyperscaler startup backed by Nvidia (NVDA), looks to raise as much at $2.7 billion with its deal.
The IPO will price Wednesday night and trade Thursday under the symbol CRWV. The range is a wide $47 to $55 per share, but that could narrow as the pricing nears.
The deal has been scaled back from initial estimates and a lower pricing could further underscore skittishness in investors putting cash back into AI names.
One hedge fund manager told the FT: “No one knows where it’s going to be in three years’ time. Uncertainty is also the devil of all good investments. It may be fine, but it may not be.”
But another called it the WeWork of AI Data Centers due to its long leases but short-term customer commitments.
Earnings season continues to wind down, but retail names are still in the picture. Dollar Tree (DLTR) reports on Wednesday and Lululemon (LULU) on Thursday.
Meme favorite GameStop (GME) reports Tuesday. Shares are down 25% YTD, reflecting overall markets selling pressure and concern regarding potential Bitcoin integration into its business model.
Wall Street analysts maintain a Strong Sell rating, while Seeking Alpha’s Quant Ratings recently downgraded the stock from Buy to Hold.
SA author The Gaming Dividend says GameStop’s stock price remains disconnected from fundamentals, with weak Q4 earnings expected due to declining hardware and software sales. While speculation about GameStop adopting bitcoin could provide a short-term boost, the timing may be unfavorable given the current crypto cycle. Additionally, shifts in the gaming industry and growing competition from digital platforms, such as Microsoft’s Game Pass, continue to challenge GameStop’s long-term business model, reinforcing the bearish outlook.
Also on the earnings calendar:
KB Home (KBH) and Oklo (OKLO) report Monday.
Joining GameStop on Tuesday are McCormick (MKC), Smithfield Foods (SFD) and Pony AI (PONY).
Cintas (CTAS), Paychex (PAYX), Chewy (CHWY) and Jefferies Financial (JEF) weigh in on Wednesday with Dollar Tree.
Winnebago (WGO) reports along with Lululemon on Friday.
In the news this weekend, AI search startup Perplexity AI said it wants to acquire TikTok from ByteDance (BDNCE) and open source its algorithm, as the short video app nears its April 5 ban deadline.
“Perplexity is singularly positioned to rebuild the TikTok algorithm without creating a monopoly, combining world-class technical capabilities with Little Tech independence,” the company said in a blog post.
The Nvidia-backed startup wants to rebuild TikTok’s algorithm from scratch in American data centers with American oversight. It also plans to make TikTok’s recommendation system transparent and open source.
Perplexity first made its bid for TikTok in January, but it faces much bigger rivals like Oracle (ORCL), Microsoft (MSFT), and a consortium of investors led by former Dodgers owner Frank McCourt.
For income investors, Best Buy (BBY) goes ex-dividend on Tuesday, paying out on April 15.
Humana (HUM), Keurig Dr Pepper (KDP) and Ralph Lauren (RL) go ex-dividend on Friday. Humana has a payout date of April 25, while Keurig Dr Pepper and Ralph Lauren pays out on April 11.
And in the Wall Street Research corner, BofA says investors should look for stocks with a proven track records of navigating past downturns and also have low crowding risk and minimal earnings volatility.
Analysts screened for stocks that have outperformed in at least 80% of market pullbacks of 10% or more since the early 1980s. These stocks are also considered high quality (with an S&P quality rating of B+ or higher) and are underweighted by active fund managers.
Among the names are Verizon (VZ), AutoZone (AZO), Pepsi (PEP), Costco (COST), Conagra (CAG), J&J (JNJ), General Mills (GIS) and Hormel Foods (HRML).
