The stock market enters a critical week with FedEx earnings and the Fed's preferred inflation measure on deck. Here are three big things to watch.
1. FedEx Earnings: A Bellwether for Global Trade
FedEx reports quarterly results this week, and as usual, the package delivery giant will offer a window into the health of global commerce. With supply chains still adjusting post-pandemic and e-commerce growth normalizing, analysts expect revenue to slip 3% year-over-year. But the real focus will be on forward guidance—especially any commentary on business-to-business shipments, which have softened in recent months.
“FedEx is the canary in the coal mine for the global economy. If they cut their outlook, it’s a red flag for industrial stocks,” says Morgan Stanley analyst Ravi Shankar.
Investors will also scrutinize cost-cutting measures and margin performance. The stock has dropped 18% from its 52-week high, so a beat could spark a rally. Miss, and expect the Dow to feel the pain.
2. PCE Inflation Data: The Fed's North Star
On Friday, the Commerce Department releases May’s Personal Consumption Expenditures (PCE) price index—the Federal Reserve’s preferred inflation gauge. Core PCE, which strips out volatile food and energy costs, is expected to rise 0.3% month-over-month, keeping the annual rate at 2.8%.
Those numbers are above the Fed's 2% target, but still low enough to keep the central bank on hold. Markets are pricing in a rate cut in September, but sticky inflation could dash those hopes. “If core PCE comes in hotter than expected, the 'higher for longer' narrative gets a jolt,” warns economist Laura Hu of Goldman Sachs.
Any surprise in the data will ripple through bond yields and tech stocks, which are particularly sensitive to interest rate expectations.
3. Housing Data and Consumer Sentiment
Beyond the headline events, Tuesday brings May new home sales, and Friday the University of Michigan’s final June consumer sentiment reading. New home sales have been volatile, with mortgage rates hovering near 7%. A sharp drop would signal deep distress in the housing market.
Consumer sentiment, meanwhile, has been sinking as inflation fatigue and a slowing job market weigh on households. Economists expect the index to hold at 65.1—near recessionary lows. “If sentiment falls below 60, that’s a warning light for consumer spending, which drives 70% of the economy,” says Hu.
Taken together, these three events will determine whether the S&P 500 can extend its modest June gains or whether summer doldrums set in early. Buckle up.
