U.S. equities continued to climb after closing at all-time highs on Friday, although the market will be tested this week by the Federal Open Market Committee’s anticipated interest rate hike. The Fed is expected to increase rates by 25 basis points and will be the first hike since December 2015.
The latest mortgage purchase application index and weekly oil inventory data will be available on Wednesday. Mortgage applications have declined for two consecutive weeks as home loan rates increased, but loan refinancing, not home purchasing, has accounted for most of the slowdown. Analysts expect oil stockpiles will rise by a million barrels. Non-OPEC countries announced they would cut production over the weekend, pushing West Texas Intermediate Crude to $54 a barrel. U.S. retail sales, domestic industrial production, capacity utilization for November, and the latest producer price index (PPI) will also be out on Wednesday. Economists anticipate a 0.4-percent increase in retail sales, a slight decrease in industrial production and capacity utilization, and a 0.2-percent rise in the PPI.
Weekly unemployment claims are forecast to drop slightly as the economy picks up. Both headline CPI and core CPI’s are forecast to rise 0.2 percent. The consensus estimate calls for a slight increase in the Empire State and Philly Fed manufacturing surveys, which will be released Thursday. Housing starts for November will be out on Friday. The week’s notable overseas economic reports will include Chinese and eurozone industrial output and the latest U.K. consumer price index (CPI), which is expected to increase by 1 percent.
Adobe Systems and Oracle will release post-season quarterly earnings on Thursday. Consensus estimates for software developer Adobe Systems (ADBE) call for earnings per share (EPS) of $0.86, significantly higher than the $0.62 per share reported during the same period last year. Analysts are calling for EPS of $0.61 on revenues of $9.2 billion for Oracle (ORCL) following mixed results last quarter.