Investors remain cautious ahead of Wednesday's Federal Reserve policy statement and the looming "Brexit" vote. With several key economic reports due this week, positive data could remedy some of the past week's volatility.
The Federal Open Market Committee (FOMC) is not expected to raise interest rates during its June 14-15 meeting. Economists believe the Fed will wait for consistently positive jobs data before another hike. Investors expect central bankers in Britain and Japan will also refrain from any rate changes when they meet this week.
Concerns regarding the United Kingdom's June 23 vote on European Union membership could influence markets in the short term, though the actual impact of a "Brexit" on the global economy is not likely to live up to the hype. The debate has strengthened the U.S. dollar and the Chinese yuan has subsequently weakened to a new 52-week low versus the greenback. Over the weekend, China reported solid industrial growth, but also a sharp decline in private sector investment. It led Chinese sell-offs that spread to European and American markets.
The Federal Reserve meeting and numerous reports will keep investors active this week. May retail sales will be released on Tuesday. The consensus calls for 0.3 percent growth in American consumer spending. Business inventories, a key component in GDP calculations, will be out as well.
U.S. industrial production, capacity utilization and producer prices will be out on Wednesday, along with the mortgage application index and the Empire State manufacturing survey. Economists expect the Empire State survey to moderate to minus 5 in June.
May's consumer price index and core CPI will be available on Thursday. Economists forecast increases of 0.3 percent and 0.2 percent, respectively. The homebuilders index, also scheduled for Thursday, is expected to increase to 59 amid rising homebuilder optimism. The latest number on housing starts and building permits for May will be reported on Friday. Housing starts were 1.172 million in April, but are expected to moderate to 1.145 million in May. The Atlanta Federal Reserve GDP Now Model forecasts second quarter growth will be 2.5 percent.
Kroger, Rite Aid and Oracle will report earnings this week. The consensus calls for Kroger (KR) to report earnings per share of $0.69 on revenues of $34.88 billion. Kroger has a streak of 49 consecutive quarters of positive same-store sales growth on the line. The retail drugstore market will be on display when Rite Aid (RAD) reports its earnings. Analysts are anticipating $0.05 per share in profits and revenues of $8.26 billion. The software, technology and cloud computing space will be under the gun when Oracle (ORCL) reports fiscal fourth quarter results. The company is expected to show an EPS of $0.81 and revenues of $10.46 billion.