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Core PCE, Income and Spending, CarMax: 3 Things to Watch

Published 09/29/2022, 04:10 PM
Updated 09/29/2022, 04:25 PM
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By Liz Moyer

Investing.com -- Stocks gave back their gains and ended Thursday deeply in the red as the month rapidly draws to a close tomorrow.

Investors may be happy to put it behind them. All month, the markets have battled worries over overly aggressive actions by the Federal Reserve to tame inflation.

Rising rates are cooling the housing market by pushing borrowing costs close to 7%, twice what they were at the start of the year. Tech stocks are getting beaten down by rising Treasuries as investors flee riskier assets. The soaring dollar is wreaking havoc in foreign currencies, good for American tourists but not so good for companies selling products abroad.

The next Fed meeting isn't until November, but already analysts are betting on another 0.75-point rate increase, which would make it four in a row. Investors worry that the Fed might overshoot its target and as a result tip the economy into a recession. GDP for the second quarter didn't budge, showing a drop of 0.6%, after the 1.6% first-quarter contraction. 

Strong labor data is making the guesswork harder. Thursday's data showed unemployment unexpectedly drop last week, and a recession would mean job losses.

Here are three things that could affect markets tomorrow:

1. Personal consumption expenditures

The Fed's preferred inflation measure, the PCE, comes out tomorrow for August. Analysts expect the core PCE price index rose 0.5% compared with 0.1% the prior month. The year over year expectation is a gain of 4.7% compared with 4.6% the prior month. The data are released at 8:30 ET (12:30 GMT).

2. Income and spending

Personal income and personal spending data are also due out at 8:30 ET. The month to month expectation for August is 0.3% for income and 0.2% for spending. Both would be up a tick from the prior month.

3. CarMax earnings

Used car seller CarMax Inc (NYSE:KMX) tumbled on Thursday after worse than expected earnings, providing a glimpse into shifting consumer sentiment. After a pandemic boom in sales, CarMax said the market has cooled as inflation and sentiment make would-be buyers hold off on new purchases. Shares fell 24% on Thursday.

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