CPI, consumer sentiment reports, earnings season and more: Monday's 5 things to know

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Fox News contributor and The King’s College economics professor Brian Brenberg says the Biden administration finally admitted ‘how bad the inflation problem is.’

Today's Monday. Here are the key events taking place this week that could impact trading.

REPORTS RELEASED: Inflation will be a big focus this week with the release of the October consumer price index on Thursday and the University of Michigan’s preliminary consumer sentiment index for November, slated for a Friday release.

In the consumer price index report, the Bureau of Labor Statistics is expected to say the reading jumped 0.7% month-over-month in October, the third month of accelerating growth and up from 0.4% in September. 

On a year-over-year basis, watch for prices to have climbed 8.0% in October, easing back from September’s hotter-than-expected reading of 8.2%. 

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The price of groceries continues to rise due to inflation, costing families more and cutting into their budgets. (iStock / iStock)

It would be the lowest reading since February, and the fourth month in a row of slowing growth after June’s 9.1% surge, which marked the highest inflation rate in almost 41 years (since November 1981). 

Factoring out volatile food and energy costs, the core consumer price index is anticipated to rise 0.5% in October, slightly trailing a 0.6% spike the previous month. 

Annually, core CPI is forecast to climb 6.5% in October. That’s down slightly from a hotter-than-expected reading of 6.6% in September, the highest in 40 years (since August 1982).

Investors will also pay close attention to the University of Michigan’s preliminary consumer sentiment index for November.

The Refinitiv poll shows a slight drop in the index of 0.9 to 59.0, with October's reading at 59.9.

MARKET LOWER: U.S. stocks rose Friday but finished the week with losses after the monthly jobs report did little to shift expectations for continued interest-rate increases from the Federal Reserve. 

Stocks have come under pressure in recent days as central banks including the Fed and the Bank of England aggressively raise interest rates to combat inflation. 

Fed Chairman Jerome Powell signaled this week that officials might raise borrowing costs next year more than they had projected. 

The Dow Jones Industrial Average lost 1.4% for the week, snapping a four-week winning streak, while the S&P 500 fell 3.3%. The tech-heavy Nasdaq Composite declined 5.6% in its worst week since January. 

PELOTON SHARES PLUNGE ON WIDER THAN EXPECTED LOSS, WEAK REVENUE GUIDANCE

Federal Reserve Chairman Jerome Powell speaks during a news conference at the Federal Reserve Board building in Washington, Wednesday, July 27, 2022. (AP Photo/Manuel Balce Ceneta / AP Images)

As they have for months, investors scrutinized the fresh employment data for clues about how much more the Fed may tighten financial conditions as it seeks to cool the economy and bring down high inflation. 

The report Friday left intact the picture of a strong U.S. labor market. Employers added a seasonally adjusted 261,000 jobs in October, while wage gains ticked up from the previous month. 

"Today's numbers probably weren't numbers the Fed wanted to see," said Rusty Vanneman, chief investment strategist at Orion Advisor Solutions. They really need some economic softness to slow inflationary pressures, and this number didn't give it." 

Still, there were signs that the economy is slowly losing momentum. The monthly jobs gains were the fewest since December 2020, and wage increases have eased on an annual basis. 

EARNINGS WINDING DOWN: With most companies in the S&P 500 having reported third-quarter earnings, analysts expect that earnings grew 2.1% in the third quarter from a year earlier, down from projections for 9.7% growth at the end of June, according to FactSet. 

STARBUCKS

Earnings reports drove moves in individual stocks. 

Shares of Starbucks jumped $7.18, or 8.5%, to $91.86 after the company reported record sales last quarter but also said its profit was eroded by higher wages and investments.

PayPal shares dropped $1.37, or 1.8%, to $75.18 after the fintech company cut its revenue outlook.

Look for BioNTech, Blue Apron, Choice Hotels, NRG Energy and Palantir Technologies will be among the companies kicking off the week with earnings before the markets open on Monday.

Earnings to watch after the bell will include Activision Blizzard, Diamondback Energy, Groupon, Lyft, SmileDirectClub, Take-Two Interactive, Tripadvisor and Virgin Orbit.

EXXON MOBIL OIL FIELD SALE: Exxon Mobil Corp, according to reports, is expected to lose about $2 billion when it sells an oil field off the coast of California, where an oil spill halted operations in 2015.

The petroleum giant is slated to sell the offshore oil and gas field to Sable Offshore, which was founded and operated by James Flores, for $643 million.

Reuters reported that Flores will borrow 97% of the money for the purchase from Exxon under a five-year loan.

Sable Offshore is a blank check company, or one that raises money for acquiring businesses.

US CRUDE OIL EXPORTS TO ASIA POISED TO HIT RECORD HIGH

FILE – Clean-up workers monitor the source of an oil pipeline break near Refugio State Beach, north of Goleta, Calif., on May 20, 2015. ( AP Photo/Michael A. Mariant, File / AP Newsroom)

The deal between Flores and Exxon is that he must restart operations at the Santa Ynez field by 2026 or face Exxon taking back the operations, Reuters reported.

Exxon is selling the oil and gas field after failing to restart operations due to a pipeline spill in 2015 that leaked over 120,000 gallons of oil into the Pacific Ocean.

In its plans to restart operations, Exxon proposed using dozens of trucks to ship oil to refineries, but Santa Barbara officials rejected the plan back in March.

EMERGING FROM BANKRUPTCY: Sears Holdings has emerged from bankruptcy after more than 10,000 court filings and a four-year stay that saw the department store chain shrink from almost 700 stores to less than two dozen.

The bankruptcy estate’s reorganization plan took effect on Oct. 29, signaling an end to Chapter 11 and the start of a liquidation process for its remaining assets.

Sears Holdings is a shell company. It sold its stores in February 2019 to ESL Investments, an affiliate of former Sears chair Eddie Lampert. The $5.2 billion sale included more than 400 retail locations.

Syracuse University professor of retail practice Ray Wimer doesn't expect the remaining 20+ Sears stores from that sale to survive. "They do not have an appealing value proposition to customers and the amount of competition in the retail marketplace offering similar goods means the end will come at some point," he told FOX Business.

SEARS PLANS TO SELL CHICAGO CORPORATE HEADQUARTERS

A view of a Sears store in Chicago before it closed. (Jacek Boczarski/Anadolu Agency via Getty Images / Getty Images)

Sears once advertised itself as "Where America Shops" and boasted merchandise lines from supermodel Cheryl Tiegs and "Charlie’s Angel's" star Jaclyn Smith.

At its peak, Sears, Roebuck was the world's largest retailer, with nearly 3,500 Sears and Kmart stores, including 2,350 full-line and off-mall stores, and 1,100 specialty retail stores. Sears also had a portfolio of prominent brands and operating businesses, including Kenmore, DieHard, Craftsman, Sears Home Services, Sears Auto Centers and Innovel.

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Lampert, then chair of Kmart Holding, bought Sears for $11 billion in March 2005 in a bid to hold off brick-and-mortar competitors such as Walmart and e-commerce competitors such as Amazon.

At the time of the merger, the Sears-Kmart combo, called Transformco, had annual revenues of $55 billion, a fifth of Walmart's fiscal 2004 total of $256 billion. 

Sears tried to stave off bankruptcy by closing stores and selling assets. Sears sold its Craftsman brand to Stanley Black & Decker in 2017 for $775 million and closed 300 stores in 2018.

It wasn’t enough.

The company entered bankruptcy in October 2018 with 687 stores.

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