Five things you need to know before the market opens on Monday May 15:
1. -- Stock Futures Higher With Debt Talks, Earnings In Focus
U.S. equity futures bumped higher Monday, while the dollar held gains against its global peers and short-term Treasury yields extended recent gains, as markets braced for the wind-down of the first quarter earnings season while eyeing developments in Washington's debt ceiling standoff.
Only fifteen S&P 500 companies are expected to report first quarter earnings this week, although a trio of major retail updates will provide important clues as to the health of the U.S. consumer, as a modestly better-than-expected reporting season comes to a close.
Collective S&P 500 profits are expected to have fallen 0.6% from last year to a share-weighted $438.5 billion, confirming a so-called earnings recession following the 3.2% decline recorded over the three months ending in December.
However, around 76.6% of reporting companies have topped Street forecasts, producing one of the strongest 'beat' rates in years that eclipses not only the recent four-quarter average of 73.5% but also the long-term average of 66.3%.
Still, that momentum hasn't been enough to carry stocks out of its tight two-month trading range, even with the CBOE Group's key market volatility gauge trading firmly under the 20 point mark, as investors look to both developments in the debt ceiling standoff, weakening growth prospects and elevated inflation levels as near-term headwinds.
A softer reading of the University of Michigan's benchmark consumer sentiment index underscored some of those concerns, with the headline number falling more than six points in April to 57.7, and long-term inflation expectations rising by 20 basis points to 3.2%.
That helped carry Treasury yields higher in the Friday session, and again into Monday, with benchmark 2-year notes pegged at 4.006% and 10-year notes trading at 3.479%.
The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.04% lower at 102.644.
The Turkish lira, meanwhile, hit a two-month low against the dollar following weekend elections that saw incumbent Tayyip Erdogan fail to reach the 50% threshold required to a avoid a run-off, putting his nearly three decades of rule in question and unsettling the NATO member's regional allies.
Heading into the start of the trading day on Wall Street, futures tied to the S&P 500 were priced for a 16 point opening bell gain while those linked to the Dow Jones Industrial Average are set for a 110 point bump. The tech-focused Nasdaq was marked 42 points higher.
In Europe, the region-wide Stoxx 600 was marked 0.25% higher in early Frankfurt trading while London's FTSE 100 gained 0.38%. Overnight in Asia, the region-side MSCI ex-Japan index was marked 0.72% higher into the close of trading while the Nikkei 225 ended 0.81% higher at 29,626.34 points.
2. -- Week Ahead: Retail Sales, Earnings To Test U.S. Consumer Strength
Wall Street will navigate a series of earnings releases and data points focused on the U.S. consumer this week as sentiment wanes into the summer months amid rising jobless claims and a slowing economy.
The Commerce Department will publish its regular reading of April retail sales on Tuesday, with analysts looking for a modest rebound in spending from March levels, although the headline gain of 0.7% will likely be powered by higher spending on gasoline.
Walmart (WMT), Target (TGT) and Home Depot (HD) will also release first quarter earnings this week, with investors looking to gauge the pace of same-store sales growth at the country's biggest retailers, as well as profit margin pressures related to labor, input and operating costs that continue to climb from last year's levels.
Home Depot will report before the market opens on Tuesday, with Walmart and Target reporting Wednesday and Thursday respectively.
Housing and manufacturing data will also be in focus, with April housing starts and building permit figures expected on Wednesday, with analysts looking for a modest slowdown from March levels to an annual rate of 1.4 million units.
The Empire State manufacturing index for the month of April is expected before the market opens on Monday, with the Philadelphia Fed's regional index of manufacturing activity due on Thursday.
Finally, Federal Reserve Chairman Jerome Powell will round out the week with a sit-down discussion at the Thomas Laubach Research Conference in Washington with his predecessor Ben Bernanke.
3. -- Tesla Higher As Elon Musk Meets With French President Macron
Tesla (TSLA) shares nudged higher in pre-market trading ahead of a meeting between CEO Elon Musk and French President Emmanuel Macron later today at a business conference in Paris.
Macron, who is looking to energize his second term at the Elysee Palace following a series of bitter disputes with labor leaders over his decision to lift the country's retirement age, will meet with Musk, as well as Pfizer CEO Alberta Bourla and Disney boss Bob Iger, as part of the country's annual "Choose France" investment event in nearby Versailles.
Macron way also attempt to woo Musk into choosing France for the location of Tesla's next EV battery plant, following a move by Taiwan's ProLogium to build a $5.7 billion factory in the port of Dunkirk earlier this month.
Tesla shares were marked 0.5% higher in pre-market trading, indicating an opening bell price of $168.88 each.
4. -- Shake Shack Jumps As Activists Target High-End Burger Chain
Shake Shack (SHAK) shares moved higher in pre-market trading following reports that activist investors a will seek at least three seats on the restaurant chain's board and push for changes that will arrest the stock's significant two-year decline.
The Wall Street Journal reported Sunday that Engaged Capital, a Newport Beach, California-based hedge fund with a 6.6% stake in Shake Shack, will run a proxy battle for three board seats after failing to reach an agreement on strategy changes from conversations with management earlier this year.
Shake Shack shares have fallen more than 50% of the past two years as its high-end lunchtime dining has slowed amid changing post-pandemic work patterns and a surge in consumer price inflation. Earlier this month, the group posted a narrower-than-expected first quarter loss of 4 cents per share, but said system-wide sales rose 27.5% from last year to $394.7 million.
Shake Shack shares were marked 3.8% higher in pre-market trading to indicate an opening bell price of $67.69 each.
5. -- Biden 'Optimistic' On Debt Ceiling Deal As Yellen Repeats June 1 Deadline
Treasury Secretary Janet Yellen repeated her warning that the U.S. could face default risk as early as June 1 without a solution to the debt ceiling, adding the current standoff remains "more difficult" than the similar partisan standoff from 2011.
Speaking on the sidelines of the G-7 finance ministers meeting in Niigata, Japan, Yellen told Reuters that she still expected a solution to the current impasse, which has Republican lawmakers demanding concessions on spending from their Democratic rivals before allowing a vote on an increase, but stuck to her prediction that the U.S. could run out of money to pay its debts by as early as June 1.
President Joe Biden, meanwhile, told reporters in Delaware that he expects to have the next meeting with House Speaker Kevin McCarthy on Tuesday, adding that he's "optimistic" a deal can be done. Biden is scheduled to leave for the G-7 leaders summit in Hiroshima on Wednesday.
House Republicans passed a bill late last month calling for $4.8 trillion in spending cuts, phased over the next ten years, in exchange for a one-year, $1.5 trillion increase in the $31.4 trillion debt ceiling. Democrats, who control the Senate, have rejected the cuts as a 'dead on arrival'.
