The week ahead will bring to an end the second quarter and the first half of what has been a challenging 2022 for investors.
Several key economic reports, including core PCE inflation – the Federal Reserve's preferred measure of consumer prices – are on tap, along with earnings from Nike (NKE), Jefferies (JEF), Micron Technology (MU), and Bed Bath & Beyond (BBBY).
The S&P 500 rose by more than 3% on Friday and gained over 6% for the week, its second-best week this year and its first weekly rise since late May.
The benchmark index still remains on pace for one its worst opening six months since 1970. Only five times since 1932 has the S&P 500 lost 15% or more in the first six months of a year; through Friday's close, the benchmark index was down just under 18%.
“As bad as [this year] has been for investors, the good news is previous years that were down at least 15% at the midway point to the year saw the final six months higher every single time, with an average return of nearly 24%,” LPL Financial chief market strategist Ryan Detrick noted earlier this week.
And indeed, investors remain generally optimistic that a rebound is ahead despite this year’s downturn.
Although analysts have lowered their price targets on S&P 500 companies in recent months — bringing the consensus bottom-up target price for the index below 5,000 for the first time since August 2021 — the estimate of 4,987.28 as of June 23 remains 31.4% above the closing price of the same day’s closing price of 3,795.73, according to data from FactSet.
This suggests analysts expect the index to rise by more than 30% in the next 12 months.
J.P. Morgan strategist Marko Kolanovic indicated in a note to clients Friday that U.S. equities may climb as much as 7% next week as investors rebalance portfolios amid the end of the month, second quarter, and first half of the year.
“Next week’s rebalance is important since equity markets were down significantly over the past month, quarter and six-month time period,” Kolanovic said. "On top of that, the market is in an oversold condition, cash balances are at record levels, and recent market shorting activity reached levels not seen since 2008."
On the economic calendar, personal consumption expenditures (PCE) data will be closely watched by traders this week. The Bureau of Economic Analysis will release its monthly PCE deflator on Thursday, giving investors the latest view on inflation across the U.S. economy as the Federal Reserve moves up its key benchmark interest rate to tame price increases.
Economists surveyed by Bloomberg expect PCE to rise 0.7% in May compared to 0.2% the prior month. On a year-over-year basis, the PCE deflator is expected to accelerate 6.4%, up from a climb of 6.3% in April.
The core PCE index, which strips out the cost of food and energy, is expected to hold steady from the prior month’s print. Economists are looking for a 5.1% increase in core PCE in May, compared to April’s 5.1% rise.
The latest PCE data will come as the U.S. central bank’s fight against inflation looks increasingly more complex, with a growing number of economists and strategists on Wall Street suggesting that the Fed will not be able to rein in prices without tipping the economy into a recession.
“I do worry that the probability of a soft landing, which means you bring down inflation without unduly hurting growth and employment, has declined significantly because of a series of Federal Reserve mistakes,” economist Mohamed El-Erian told Yahoo Finance Live last week.
Elsewhere on the economic calendar, investors will keep a close eye on durable goods figures on Monday, the Conference Board’s consumer confidence reading out Tuesday, and several reports on manufacturing and housing throughout the week. Investors will also get a third and final read on first quarter GDP.
Monday: Durable Goods Orders, May preliminary (0.2% expected, 0.5% during prior month); Durables Excluding Transportation, May preliminary (0.3% expected, 0.4% during prior month); Pending Home Sales, month-over-month, May (-3.9% expected, -3.9% during prior month); Pending Home Sales NSA, year-over-year, April (-11.5% during prior month); Dallas Fed Manufacturing Activity, June (-6.5 expected, -7.3 during prior month)
Tuesday: Advance Goods Trade Balance, May (-$105.4 billion expected, -$105.9 billion during prior month, revised to -$106.7 billion); Wholesale Inventories, month-over-month, May preliminary (2.2% expected, 2.2% during previous month); Retail Inventories, month-over-month, May (1.6 expected, 0.7% during prior month); FHFA Housing Pricing Index, April (1.6% expected, 1.5% during prior month); S&P CoreLogic Case-Shiller 20-City Composite, month-over-month, April (1.85% expected, 2.42% during prior month); S&P CoreLogic Case-Shiller 20-City Composite, year-over-year, April (21.20% expected, 21.17% during prior month); S&P CoreLogic Case-Shiller U.S. National Home Price Index, year-over-year, April (20.55% during prior month); Conference Board Consumer Confidence, June (100 expected, 106.4 during prior month); Richmond Fed Manufacturing Index, June (-5 expected, -9 during prior month)
Wednesday: MBA Mortgage Applications, week ended June 24 (-4.2% during prior week); GDP Annualized, quarter-over-quarter, 1Q third (-1.5% expected, -1.5% prior); Personal Consumption, quarter-over-quarter, 1Q third (3.1% expected, 3.1% prior); GDP Price Index, quarter-over-quarter, 1Q third (8.1% expected, 8.1% prior); Core PCE, quarter-over-quarter, 1Q second (5.1% expected, 5.1% prior)
Thursday: Personal Income, month-over-month, May (0.5% expected, 0.4% during prior month); Personal Spending, month-over-month, May (0.4% expected, 0.9% during prior month); Real Personal Spending, month-over-month, May (-0.2% expected, 0.7% during prior month); Initial Jobless Claims, week ended June 25 (230,000 expected, 229,000 during prior week); Continuing Claims, week ended June 18 (1.310 million expected, 1.315 million during prior week); PCE Deflator, month-over-month, May (0.7% expected, 0.2% during prior month); PCE Deflator, year-over-year, May (6.4% expected, 6.3% during prior month); PCE Core Deflator, month-over-month, May (0.4% expected, 0.3% during prior month); PCE Core Deflator, year-over-year, May (4.8% expected, 4.9% during prior month); MNI Chicago PMI, June (58 expected, 60.3 during prior month)
Friday: S&P Global U.S. Manufacturing PMI, June final (52.4 expected, 52.4 prior); Construction Spending, month-over-month, May (0.4% expected, 0.2% during prior month); ISM Manufacturing, June (54.7 expected, 56.1 during prior month); ISM Prices Paid, June (80.0 expected, 82.2 during prior month), ISM New Orders, June (55.1 during prior month); ISM Employment, June (49.6 during prior month); Wards Total Vehicle Sales, June (13.40 million, 12.68 during prior month)
Before market open: No notable reports scheduled for release.
Before market open: No notable reports scheduled for release.
After market close: AeroVironment (AVAV)
After market close: MillerKnoll (MLKN)
Before market open: Constellation Brands (STZ)
No notable reports scheduled for release.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc