Market Week Ahead: Inflation, Tariffs, and Corporate Earnings Take Center Stage

Stocks Show Minimal Change as Investors Assess Earnings, Economic Data, and Trade Tensions

During the first week of February, stock markets remained relatively stable as investors weighed earnings reports from Big Tech companies, a strong January jobs report, and ongoing updates on President Donald Trump's trade policies. The S&P 500 (^GSPC) closed the week almost flat, while the Nasdaq Composite (^IXIC) and Dow Jones Industrial Average declined approximately 0.4%.

Inflation Takes Center Stage

Inflation will be the primary focus for the week ahead, with the release of the Consumer Price Index (CPI) on Wednesday morning. Wholesale inflation and retail sales figures will also be closely monitored.

Trump Tariff Announcements

Investors will also pay close attention to President Trump's announcement of 25% tariffs on steel and aluminum imports, as well as details on potential reciprocal measures.

Corporate Earnings

78 S&P 500 companies, including McDonald's (MCD), Coca-Cola (KO), Super Micro Computer (SMCI), and Airbnb (ABNB), are scheduled to announce their earnings.

Waning Tail Risk

The January jobs report indicated continued labor market strength, with an unexpected decline in the unemployment rate, wage growth exceeding expectations, and an upward revision to December's job gains. Economists now believe the Federal Reserve (Fed) is likely to hold off on cutting interest rates for the time being.

Trump Tariff Watch

Stocks initially declined on Monday after President Trump's 25% tariffs on Mexico and Canada were delayed by a month. However, the potential impact of tariffs on inflation and monetary policy remains a concern for investors. Trump has since announced plans to impose 25% tariffs on steel and aluminum imports from all countries.

Price Check

With investors focused on inflation data as a barometer for potential interest rate cuts, a fresh CPI report will be released on Wednesday. Wall Street economists forecast a headline inflation rate of 2.9% in January, unchanged from the previous month. On a core basis, which excludes food and energy prices, CPI is expected to increase by 3.1% year-over-year, below the 3.2% recorded in December.

Retail Report

The first retail sales report of 2025 will be released on Friday. Economists anticipate flat retail sales for January compared to December. However, the control group of retail sales, which excludes volatile categories and is incorporated into gross domestic product (GDP), is expected to rise by 0.4%, down from the 0.7% increase seen in December.

Earnings Scorecard

Over 62% of S&P 500 companies have reported their earnings, and the year-over-year growth rate continues to improve. As of Friday, the S&P 500 was pacing for earnings growth of 16.4% compared to the previous year, marking the fastest growth rate in three years.

Macro Market Dynamics

Despite impressive earnings results, macro factors have contributed to choppy market conditions, with stocks struggling to find a clear direction. Inflation expectations among consumers have recently surged, raising concerns about the impact of Trump's tariff policy.

Weekly Calendar

Monday:

* Economic data: New York Fed one-year inflation expectations, January
* Earnings: McDonald's (MCD), Monday.com (MNDY)

Tuesday:

* Economic data: NFIB small business optimism, January
* Earnings: BP (BP), Coca-Cola (KO), DoorDash (DASH), Humana (HUM), Lyft (LYFT), Marriott International (MAR), Shopify (SHOP), Super Micro Computer (SMCI), Upstart (UPST), Zillow Group (Z)

Wednesday:

* Economic data: Consumer Price Index, month over month, January; Core CPI, month over month, January; CPI, year over year, January; Core CPI, year over year, January; Real average hourly earnings, year over year, January; MBA Mortgage Applications, week ending Feb. 7
* Earnings: Albermarle (ALB), Biogen (BIIB), CVS Health (CVS), Cisco (CSCO), Dutch Bros (BROS), Generac (GNRC), Kraft Heinz (KHC), MGM Resorts (MGM), Reddit (RDDT), Robinhood (HOOD), The TradeDesk (TTD)

Thursday:

* Economic data: Producer Price Index, month over month, January; PPI, year over year, January; Initial jobless claims, week ending Feb. 8
* Earnings: Airbnb (ABNB), Applied Materials (AMAT), Coinbase (COIN), Crocs (CROX), Datadog (DDOG), Duke Energy (DUK), DraftKings (DKNG), John Deere (DE), Palo Alto Networks (PANW), Roku (ROKU), Sony (SONY), Twilio (TWLO), Wynn Resorts (WYNN)

Friday:

* Economic data: Retail sales, month over month, January; Retail sales ex-auto and gas, January; Import price index, month over month, January; Export prices, month over month, January; Industrial production month over month, January
* Earnings: Moderna (MRNA)