Last week saw markets meandering in a tight trading range as the market adopted a wait-and-see approach amid ongoing macroeconomic uncertainties. Trading volume was notably low, with the S&P 500 (SPY) finishing the week down 0.43%, while the tech-heavy Nasdaq (QQQ) dipped 0.18% and the Dow Jones Industrial Average (DIA) fell 0.15%.

During its meeting, the Federal Reserve held interest rates steady at 4.25%–4.50%, with officials indicating they need to see more improvement in inflation before considering rate cuts. Market volatility continued to ease, with the VIX sliding below 22 for the first time since early April.

Looking ahead, this week brings a number of market-moving catalysts. Tuesday’s Consumer Price Index (CPI) release will provide critical insights into April’s inflation picture. Federal Reserve Chair Jerome Powell is scheduled to speak Thursday, the same day retail sales data drops – offering a window into consumer behavior amid tariff concerns. Ongoing U.S.-China trade discussions remain in focus, with weekend meetings extending into this week.

Earnings season continues with retail giant Walmart and tech stalwart Cisco among the notable reporters, providing further clues about corporate America’s health.

📅 Tuesday, May 13th

• Core CPI m/m: The April report is forecast to show a 0.3% month-over-month increase, following a modest 0.1% rise in March, its smallest gain in nine months. March also marked a four-year low in annual core inflation at 2.8%, easing from 3.1% in February. While this suggests cooling inflation, the expected rebound in April could point to renewed price pressures. Market participants should continue monitoring key components like shelter, which remains a significant driver of core inflation, and services, to gauge whether the Federal Reserve remains on track toward its 2% inflation target or if early signs of tariff-related cost increases are starting to emerge.

• CPI m/m: The April report is forecast to rise 0.3% month-over-month, reversing March’s 0.1% decline, with economists anticipating this could be the first data showing impacts from President Trump’s February tariffs. Market participants should closely watch whether the data supports current expectations for 75 basis points of Fed rate cuts by year-end or if a stronger print could delay the anticipated September easing.

• CPI y/y: The report is forecast to hold steady at 2.4% year-over-year, matching the March reading, which had decreased from February’s 2.8%. Energy and shelter components will be key drivers—while gasoline prices declined by 6.3% in March, a potential rebound in April could affect the headline figure. In March, rent and owners’ equivalent rent each rose 0.4%, and a similar reading in April could keep inflation elevated in core categories. Market participants should watch for reacceleration in services inflation and any surprises in shelter or energy components, as these could shift expectations ahead of the Fed’s June policy meeting.

📅 Thursday, May 15th

• Core PPI m/m: The upcoming report is forecast to show a 0.3% increase following March’s unexpected 0.1% decline. Market participants should closely monitor this critical inflation gauge as it measures price changes at the producer level excluding volatile food and energy components, potentially signaling future consumer price movements and influencing Federal Reserve policy decisions. Traders will particularly focus on whether the actual reading exceeds the 0.3% forecast, as persistent higher-than-expected readings could suggest stubborn inflation pressures.

• PPI m/m: April’s Producer Price Index is expected to rise 0.2% month-over-month, a modest rebound after March’s surprise 0.4% drop. That decline was largely driven by falling energy and food prices, which dropped 4.0% and 2.1% respectively. This month’s report will help clarify whether that weakness was a one-off or the start of a broader trend. Market participants should watch for signs of pressure in producer goods and services that could gradually feed into consumer prices in the months ahead.

• Core Retail Sales m/m: The upcoming report is forecasted to have a moderate 0.3% increase, down from March’s stronger 0.5% growth. Market participants should pay close attention to whether the data continues the deceleration trend observed since February’s 0.3% and March’s 0.5%, as this could signal cooling consumer spending, which accounts for roughly 70% of U.S. economic activity. Market participants should also focus on revisions to previous months’ figures and examine specific retail sectors like food services and online sales for deeper insights into consumer behavior ahead of potential summer spending patterns.

• Retail Sales m/m: The upcoming retail sales report is forecasted at 0% month-over-month, a significant slowdown from March’s robust 1.4% increase, which was largely driven by consumers rushing auto purchases (up 5.3%) ahead of potential tariffs. Market participants should closely monitor whether the anticipated 0% reading confirms that March’s surge was merely a pull-forward effect, with particular attention to auto sales. Traders should also assess core retail sales excluding autos for a clearer picture of underlying consumer demand and analyze category performance across building materials (previously up 3.3%), restaurants (up 1.8%), and general merchandise (up 0.6%) to gauge if consumer spending is broadly weakening or simply normalizing after tariff-related distortions.

• Unemployment Claims: The upcoming US initial jobless claims report is expected to show a slight increase to 229,000, from the previous week’s 228,000, indicating relative stability in the labor market amid ongoing economic uncertainties.
  
  Weekly claims have recently demonstrated resilience, with the four-week moving average standing at 227,000 and continuing claims having dropped to 1.88 million in early May, suggesting companies are largely retaining workers despite concerns about President Trump’s tariff policies. Market participants should closely monitor any deviation from the forecast, particularly watching if claims breach the 240,000 level, which was recently hit in late April, as persistent increases above this threshold could signal deteriorating labor market conditions and potentially influence the Federal Reserve’s current pause in interest rate adjustments.

• Fed Chair Powell Speaks: Federal Reserve Chair Jerome Powell will address markets on Thursday, where market participants should closely monitor his commentary on whether the latest inflation data will impact the Fed’s current 4.25% to 4.5% interest rate policy. Market participants should pay particular attention to Powell’s assessment of Trump’s tariff policies, which he recently cautioned could raise both inflation and unemployment — a combination that analysts warn could risk stagflation.

📅 Friday, May 16th

• Prelim UoM Consumer Sentiment: The University of Michigan will release its preliminary May Consumer Sentiment Index, with analysts forecasting a slight improvement to 53.1 from April’s final reading of 52.2, which was the lowest level since July 2022 following four consecutive monthly declines.
  
  Market participants should closely monitor year-ahead inflation expectations, which surged to 6.5% in April (the highest since 1981), as well as the expectations index. Traders should also pay attention to any commentary from survey director Joanne Hsu regarding income growth expectations and labor market sentiment, as these factors could signal whether consumer spending, which accounts for approximately 68% of US GDP, will remain resilient amid the current economic headwinds.

• Prelim UoM Inflation Expectations: The upcoming report will be closely watched as April’s reading surged to 6.5% for 1-year expectations (highest since 1981) and 4.4% for 5-year expectations (highest since 1991), marking four consecutive months of unusually large increases.
  
  Investors should focus on whether the consensus forecast of 6.6% for 1-year expectations materializes amid ongoing uncertainty around trade policy that significantly influenced April’s inflation outlook. Market participants will be evaluating how these persistently elevated inflation expectations might pressure the Federal Reserve to maintain its restrictive monetary policy stance at 4.5%, especially as consumer sentiment has fallen for four straight months with the expectations index plummeting 32% since January, the steepest three-month decline since the 1990 recession.

Earnings season rolls on. Here are some of the companies set to report this week:

📅 Monday, May 12th

• Fox Corporation (FOXA): Fox Corporation is set to report its earnings, with analysts projecting EPS of $0.91 (down from $1.09 year-over-year) and revenue of approximately $4.18 billion, representing a substantial 21.1% growth compared to Q3 2024. The revenue surge is expected to be driven by strong advertising performance, particularly from Cable Network Programming (projected 4.9% increase to $310.5 million) and Television segments (forecasted to jump 64.9% to $1.55 billion), with Tubi’s expanding audience base and Fox Sports coverage of high-profile events like the Super Bowl serving as key growth catalysts. Market participants should closely monitor advertising revenue trends, Tubi’s growth trajectory, and management commentary on margin pressures.

📅 Tuesday, May 13th

• Under Armour, Inc. (UAA): Under Armour will release its fourth quarter and full-year fiscal 2025 results, with analysts expecting a quarterly loss of $0.08 per share and revenues of $1.17 billion, representing a 12% year-over-year decline. Market participants should closely monitor Under Armour’s gross margin expansion progress, which has been a bright spot in previous quarters (improving to 49.8% in Q2), as the company continues its restructuring efforts to reduce promotional activity and establish a premium brand positioning. Key performance indicators to watch include regional revenue trends, particularly in North America, where a 15-17% decline has been projected, along with inventory levels and the company’s updated fiscal 2026 outlook, especially following recent upward revisions to its fiscal 2025 adjusted EPS guidance to $0.28-$0.30.

📅 Wednesday, May 14th

• Cisco Systems, Inc. (CSCO): Cisco Systems will report its earnings, with analysts projecting adjusted EPS of $0.92 (up 4.5% YoY) and revenue of $14.05 billion (up 10.6% YoY). Market participants should focus on security segment performance (expected at $2.19 billion, up 68.3%) and networking revenue ($6.76 billion, up 3.6%), along with Splunk acquisition’s contribution to overall growth. Watch for AI infrastructure momentum (orders exceeded $350 million last quarter) and any revisions to the full-year outlook, currently set at $56-$56.5 billion in revenue with adjusted EPS of $3.68-$3.74.

📅 Thursday, May 15th

• Walmart (WMT): Walmart is scheduled to report its earnings, with analysts expecting revenue of approximately $165.67 billion and earnings per share between $0.57 and $0.58, as the retail giant continues to navigate an environment affected by tariff uncertainties. Market participants should closely monitor same-store sales growth, projected at +3.21% compared to +4.9% in the preceding period, along with e-commerce performance. Key focus areas include Walmart’s ability to maintain its full-year guidance of 3-4% sales growth and 3.5-5.5% operating income growth despite potential tariff impacts, with particular attention to its performance among higher-income households where it has been gaining market share.

We hope this helps and happy trading!

– Trade and Travel Team