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U.S.-China trade, Costco earnings — What to know in the week ahead

Heidi Chung

Major U.S. markets will be closed on Monday in observance of Memorial Day.

It will be a short week and relatively quiet in regards to both economic data and corporate earnings. Trade-related news has taken stocks on a roller coaster ride recently. Last week, the Dow closed lower for the fifth straight week, and it could be another turbulent week for markets as investors continue to monitor negotiations progress between the U.S. and China.

The recent incoming economic data in the U.S. has been weak and thus is pointing to a soft second quarter.

“What surprises us is that, despite these signs of a rapid slowdown in US economic growth and the renewed escalation in trade tensions, the S&P 500 has held up surprisingly well,” Capital Economics wrote in a note Friday. “If markets are pinning their hopes on a US-China trade deal next month or on the Fed successfully saving the day, then they could be in for a rude awakening. At this stage it is getting hard to see how further escalations in the trade war can be avoided, with a 25% tariff on all imports from China a real possibility.”

In addition to trade developments, investors will also be paying attention to personal income and spending data due to be released Friday morning.

“The all-but-static economic environment of late has not only weighed on consumer confidence but purchasing habits as well. In recent months, consumer data have lagged and in some ways been misleading, like the still-curious drop in December spending, sparking fear of a broad retrenchment,” Wells Fargo wrote in a note Friday. “With April retail sales falling 0.2%, another surge in April spending is unlikely. Baring a huge retrenchment in May and June, spending should still be on track for a decent quarter.”

Economists surveyed by Bloomberg are expecting personal income in April to have risen 0.3%, up from the 0.1% growth in March. Personal spending in April is projected to have jumped 0.2%, down from the 0.9% increase last month.

Some notable earnings reports scheduled this week include Workday on Tuesday, Dick’s Sporting Goods Wednesday and Costco and Gap on Thursday.

Retailers have been in focus after a dismal slew of retail earnings reports last week. Furthermore, the looming final round of tariffs on $300 billion worth of Chinese goods threatens retailers and their consumers. Last week, more than 170 footwear companies united together and sent a letter to President Trump to urge him not to impose the next round of tariffs on Chinese goods.

[Read more: American shoe brands unite against Trump ]

As a few more retailers announce quarterly results this week, investors will be paying close attention to whether or not management warns about the tariffs and their potential negative affects on their businesses.

Economic calendar

Monday: N/A

Tuesday: FHFA House Price Index month-on-month, March (+0.2% expected, +0.3% prior); Conference Board Consumer Confidence, May (130.0 expected, 129.2 prior); Dallas Fed Manufacturing Activity, May (5.8 expected, 2.0 prior)

Wednesday: MBA Mortgage Applications, week ended May 24 (2.4% prior); Richmond Fed Manufacturing Index, May (6 expected, 3 prior)

Thursday: GDP Annualized quarter-on-quarter, Q1 (3.1% expected, 3.2% prior); Personal Consumption, Q1 (1.2% expected, 1.2% prior); GDP Price Index, Q1 (0.9% expected, 0.9% prior); Core PCE quarter-on-quarter, Q1 (1.3% expected, 1.3% prior); Initial Jobless Claims, week ended May 25 (214,000 expected, 211,000 prior); Continuing Claims, week ended May 18 (1.676 million prior); Wholesale Inventories month-on-month, April (0.1% expected, -0.1% prior); Pending Home Sales month-on-month, April (0.5% expected, 3.8% prior)

Friday: Personal Income, April (0.3% expected, 0.1% prior); Personal Spending, April (0.2% expected, 0.9% prior); MNI Chicago PMI, May (54.0 expected, 52.6 prior); University of Michigan Sentiment, May (101.0 expected, 102.4 prior)

Earnings calendar

Monday: N/A

Tuesday: NIO ( NIO ) before market open; Workday ( WDAY ) after market close

Wednesday: Abercrombie & Fitch ( ANF ), Canada Goose ( GOOS ), Dick’s Sporting Goods ( DKS ) before market open; PVH Corp ( PVH ) after market close

Thursday: Burlington Stores ( BURL ), Dollar General ( DG ), Dollar Tree ( DLTR ), Express ( EXPR ) before market open; Costco ( COST ), Gap ( GPS ), Ulta Beauty ( ULTA ) after market close

Friday: N/A

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung .

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