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After a tumultuous week of trading that saw major indexes whipsawed in both directions, Wall Street strategists are warning the volatility is unlikely to subside in the days ahead. Investors would be wise to buckle up as a string of high-profile economic reports and continued debates around the Federal Reserve's next policy moves could spark fresh bouts of turbulence.
Here's a look at the major events on tap that could move markets this week:
Monday, August 14th
The economic calendar is light to start the week, with just the New York Fed's one-year inflation expectations data on tap. However, any outsize stock moves could foreshadow choppy trading over the next several sessions as investors position portfolios ahead of key releases.
Tuesday, August 15th
The NFIB Small Business Optimism survey for July will provide a gauge on business sentiment, while the Producer Price Index data will offer an early read on inflationary pressures heading into Wednesday's main event - the Consumer Price Index.
Wednesday, August 16th
Key Focus: July CPI Inflation Data
All eyes will be on the July CPI report, which will show if inflationary pressures continued cooling last month. Economists expect headline CPI to be unchanged at a 3% year-over-year increase, with core CPI dipping slightly to a 3.2% annual rise.
A hotter-than-expected CPI print would likely spook markets and reignite fears that the Fed will need to keep rates higher for longer to tamp down persistent inflation. Conversely, continued deceleration could reinforce bets on a shallower 25 basis point rate hike in September.
Thursday, August 17th
Retail Sales and Manufacturing Data
The week's economic data feast continues with July retail sales numbers, which are expected to show a modest 0.3% monthly rise. A core reading of retail sales excluding autos and gas is also on tap.
Additionally, reports on industrial production, housing market sentiment, and regional manufacturing conditions from the New York Fed will provide a broader window into economic health.
On the earnings front, retail giants Walmart and Home Depot will be in the spotlight when they report quarterly results before the bell.
Friday, August 18th
To close out the week, the preliminary University of Michigan consumer sentiment reading for August along with housing starts and building permits data could cap off several eventful trading sessions.
The Bottom Line
With so much high-profile economic data concentrated over the next few days, markets are bracing for the potential of more violent price swings this week as investors attempt to parse the implications for the Fed's rate policy path. Buckle up and make sure your portfolio is well-diversified to withstand the continued bouts of volatility.
