Stocks are flirting with record highs, as investors continue to closely monitor the U.S.-China trade war and economic data.
This week, market watchers will be keeping a close eye on the Conference Board Consumer Confidence Index reading for September set to be released Tuesday.
Even as the U.S.-China trade war rages on with no end in sight, economists think that U.S. consumer confidence remains high.
“We expect the Conference Board’s measure of consumer confidence to remain elevated in September at 135.0, down only slightly from the 135.8 in August,” Nomura wrote in a note Friday. “The Conference Board’s measure tends to be more correlated with the labor market, which remains strong despite a slowdown in the pace of hiring. Elevated consumer confidence should continue to bolster consumer spending over the near term, keeping the slowdown in US economic data contained in the industrial sector.”
August’s consumer confidence data revealed that Americans are still confident and optimist about the current situation. The present situation gauge in August was the highest level since November 2000.
Nevertheless, Wells Fargo warned of a growing divergence between the Conference Board’s reading of consumer confidence and the University of Michigan’s survey of consumers. The firm argued that the disagreement between the two measures is a worrisome sign. “A look at the nearby chart makes it clear that in the past 25 years, there have been very few times where there has been this much of a gap between the two,” Wells Fargo wrote in a note Friday. “More worryingly, each of the past three recessions were preceded by a widening gap. Some of the disparity may have to do with the recent escalation in the trade war.”
Economists polled by Bloomberg expect September’s Conference Board Consumer Confidence Index reading of 133, down from 135.1 in August.
Meanwhile, on the corporate earnings front, Nike will be reporting quarterly results after the market close Tuesday. Retail has been in the spotlight over the past several months as the U.S. tariffs on Chinese goods looks to bleed over to the consumer.
Though many are concerned that the ongoing trade war will negatively impact Nike the shoemaker’s management didn’t sound worried on following its fiscal fourth-quarter results. Nike CEO Mark Parker said, “We are, and remain, a brand of China, for China.”
When analysts asked Parker about the tariffs and the economic slowdown in China, he responded, “We have not seen any impact on our business to date, and we continue to see strong momentum as we enter fiscal year 2020.”
Other notable earnings reports scheduled for this week include homebuilder KB Home, pharmacy retailer Rite Aid and chipmaker Micron.
Monday: Chicago Fed National Activity Index, August (0.13 expected, -0.36 in July); Markit U.S. Manufacturing PMI, September preliminary (50.3 expected, 50.3 in August); Markit U.S. Services PMI, September preliminary (51.4 expected, 50.7 in July); Markit U.S. Composite PMI, September preliminary (50.7 in July)
Tuesday: FHFA House Price Index month-on-month, July (0.3% expected, 0.2% in June); Richmond Fed Manufacturing Index, September (1 expected, 1 in August); Conference Board Consumer Confidence, September (133.0 expected, 135.1 in August)
Wednesday: MBA Mortgage Applications, week ended September 20 (-0.1% prior); New Home Sales, August (656,000 expected, 635,000 in July)
Thursday: GDP, Q2 (2.0% expected, 2.0% prior); Personal Consumption, Q2, (4.7% expected, 4.7% in Q1); GDP Price Index, Q2 (2.4% expected, 2.4% in Q1); Core PCE quarter-on-quarter, Q2 (1.7% expected, 1.7% in Q1); Wholesale Inventories month-on-month, August preliminary (0.2% expected, 0.2% in July); Initial Jobless Claims, week ended September 21 (211,000 expected, 208,000 prior); Continuing Claims, week ended September 14 (1.666 million expected, 1.661 prior); Bloomberg Consumer Comfort, week ended September 22 (62.7 prior); Pending Home Sales month-on-month, August (1.0% expected, -2.5% in July)
Friday: Personal Income, August (0.4% expected, 0.1% in July); Durable Goods Orders, August preliminary (-1.2% expected, 2.0% in July); Personal Spending, August (0.3% expected, 0.6% in July); Durables excluding Transportation, August preliminary (0.3% expected, -0.4% in July); University of Michigan Sentiment, September final (92.1 expected, 92.0 prior)
Wednesday: KB Home (KBH) after market close
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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