The Week Ahead on Wall Street

Economic Data

Today, look for the September ISM Services Index and September Markit services PMI. PMI stands for purchasing managers’ index. This metric is based on monthly surveys of US companies about the state of their businesses and the economy. Service reports generally track transport and communication firms, financial intermediaries, business and personal companies, information technology and computing, hotels and restaurants. Along with manufacturing data, these readings contextualize underlying trends in the economy.

Tomorrow, August job openings and August trade deficit data will be released. Trade deficit measures the difference between a country’s imports and exports. Between June and July, the US trade deficit rose from $53.5 billion to $63.6 billion.

On Wednesday, be on the lookout for Federal Open Market Committee (FOMC) meeting minutes and August consumer credit. Consumer credit measures debt that people take on to buy goods and services. In July, consumer credit climbed by a seasonally adjusted annual rate of 3.5%.

On Thursday, initial jobless claims will be released. First-time jobless claims released last week came in at 837,000, marking a 36,000 decline from the prior week. Continuing claims were down by almost 1 million, hitting 11.8 million. Though recovery for the job market is still gradual, these numbers showed a somewhat encouraging trend. That said, there is still a long way to go to get back to pre-pandemic levels of jobless claims.

To round out the week, August wholesale inventories will be released on Friday. This metric measures how much stock wholesalers have that they cannot sell. A high amount of inventory means retail demand is depressed while a low amount of inventory means demand is high. From June to July, wholesale inventories climbed by 4.6%, showing that demand for retail goods fell as some states rolled back reopening measures in July due to rising COVID-19 cases.

Earnings Reports

Third quarter earnings season will begin this week. Investors will be eager to see how companies are adjusting to what some see as a “new normal.”

Tomorrow, Levi Strauss &Co (LEVI) will report its latest results. The pandemic has been hard on most clothing companies due to store closures. Jeans makers have had a particularly difficult time as many people are choosing to wear leggings or sweatpants while working from home. Due to decreased revenue, Levi Strauss cut 700 corporate jobs, or about 15% of its corporate workforce over the summer.

Paychex Inc. (PAYX) a company that provides payroll systems, human resources help, and other services to small and medium-sized businesses, will also report earnings tomorrow. The company facilitates payment for one out of every 12 American private sector employees. It recently created new systems to help employers deal with the pandemic, including COVID-19 leave tracking and screening.

On Wednesday, Lamb Weston Holdings Inc. (LW) hands in its report card. The Idaho-based company supplies frozen potatoes, vegetables, and other food products to restaurants and grocers. It is likely that the company’s restaurant business has been hampered by the pandemic, but its grocery store business saw growth. This report will give insights into how well the company was able to alter its supply chains over the last quarter.

On Thursday, look out for an earnings report from Domino’s Pizza (DPZ). Domino’s is the world’s largest pizza company by sales and has 17,100 locations in more than 90 markets. Domino’s has been at the forefront of online ordering and delivery for some time, and when the COVID-19 pandemic hit, it stepped in to fill a surging demand for food delivery. Their digital strategy has driven sales which has continued to push the company’s stock price higher.

Delta Airlines (DAL) is also expected to report earnings on Thursday. Along with other air carriers, Delta has faced severe hardships due to the COVID-19 pandemic. Last week, the Treasury Department extended loans to seven major US airlines, but Delta and Southwest (LUV) both decided to opt out and stick to funding from private markets.

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