Five Numbers That Will Tell Us If Last Week Was Right

Last week the market held. This week it has to be right.

The S&P 500 finished its eighth straight winning week. It did that despite rising bond yields, a hawkish Fed, Walmart (WMT) warning on the consumer, and Nvidia (NVDA) falling after its best quarter ever. That kind of staying power is either strength or denial. This week begins to answer which one.

Markets are closed Monday for Memorial Day. Things pick back up Tuesday with lighter data. Then Thursday hits hard.

PCE inflation. GDP. Personal income and spending. Jobless claims. Corporate profits. New home sales. All on the same morning.

Thursday is the week's governing event. It either confirms what the Fed's April minutes already said or gives Warsh room to slow down.

Crypto enters the week quietly. Bitcoin is near $77,000 with its lowest volatility since October. The AI IPO wave is still pulling in institutional money. The next move for crypto almost certainly waits on rates. And rates almost certainly wait on Thursday.

Here is what to watch.

The Fed's preferred inflation measure arrives Thursday morning alongside GDP.

PCE is the number the Fed watches most when setting rates. April CPI already came in at 3.8%, the hottest in three years. PPI hit 6%. Economists now expect Q2 PCE near 3.9%, up from 3.6% last month. Core PCE is seen staying above 3% through the end of the year.

If Thursday confirms those forecasts, the debate shifts. The June 16 to 17 meeting becomes about when to hike, not whether to hold. Warsh would face that choice in his very first meeting.

GDP arrives at the same time. Growth is still seen near 2% for the year. But a weak GDP print next to a hot PCE would give markets the worst mix possible: slowing growth and rising prices at the same time.

What to Watch 

PCE above 3.8% year over year confirms inflation has spread beyond energy. Weak GDP next to it is the stagflation signal bond markets have been pricing for weeks.

Tuesday's CB Consumer Confidence report and Thursday's Personal Spending data together give the best consumer read of the week.

Walmart told investors last week that lower-income shoppers are pulling back on fuel. Gas purchases at its stations fell below 10 gallons per fill for the first time since 2022. That is a real behavior change.

Tuesday's Case-Shiller Home Price report adds the housing side. Mortgage rates are at 6.51%, a nine-month high. Homes are sitting longer. Sellers are cutting deals. The spring buying season has stalled.

On the earnings side, Dick's Sporting Goods (DKS), Best Buy (BBY), and Dollar Tree (DLTR) all report this week. They cover sports gear, electronics, and discount retail. That range is wide enough to show whether shoppers are trading down or pulling back entirely. Dollar Tree matters most as a read on households feeling the most pain.

What to Watch 

Weak personal spending growth next to low consumer confidence would confirm the energy shock has hit household budgets in ways the jobs data has not yet shown.

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The most telling earnings matchup this week is Salesforce (CRM) against Dell Technologies (DELL).

Salesforce is down about 30% this year. Investors have been pricing AI disruption into its core business for months. Its Agentforce product has deals on paper. This quarter shows whether those deals are turning into real revenue.

Dell is the other side of that trade. AI server demand has pushed the stock up more than 40% this year. Dell sells directly into the AI buildout. Its order backlog and guidance will show whether that cycle is still running hot or starting to cool.

Autodesk (ADSK) and Synopsys (SNPS) round out the software picture. Both test whether AI integration can protect margins when rates are rising.

What to Watch 

Salesforce guidance shows whether the SaaS recovery is real. Dell's order backlog shows how much runway the AI hardware cycle has left.

Zscaler (ZS) is one of the cleanest tests of the AI security thesis this week.

The stock has rallied hard alongside Palo Alto Networks (PANW) and CrowdStrike (CRWD). Investors have been moving toward companies where AI creates demand rather than replaces it. Security is one of the few software areas where that case is clear.

Zscaler's billing growth and customer retention will show whether that demand is holding up as corporate budgets tighten. Security tends to be the last thing companies cut. A strong print here means the trade has real earnings behind it, not just a good story.

HP Inc. (HPQ) and HEICO (HEI) also report. Both sit near the edge of the AI hardware supply chain.

What to Watch

Strong Zscaler billing growth confirms the AI security trade is built on fundamentals. A miss puts the whole rotation in question.

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Every data point this week sits on one assumption. The Strait of Hormuz stays constrained and oil stays above $100.

The Wednesday API report and Thursday EIA update will show whether the record inventory drawdown is continuing. Goldman Sachs (GS) put global stock draws at 8.7 million barrels per day in May. U.S. crude stocks have fallen four weeks in a row. Peak summer driving demand just started.

JPMorgan warns that global crude buffers could get dangerously thin as early as next week. If that happens with no deal in place, the PCE number on Thursday prints into the most stressed oil market since the war began.

ADP's jobs report lands Wednesday morning. PDD Holdings (PDD) reports with a direct read on Chinese consumer demand. The Dallas Fed on Tuesday and Chicago PMI on Friday bracket the week with factory sentiment at both ends.

What to Watch 

Any real move on a Hormuz deal before Thursday changes the inflation math before the week's biggest numbers land.

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Thursday is the hinge.

PCE, GDP, personal spending, and jobless claims all land at once. The market is already stretched between AI optimism and inflation pressure. Thursday will pull on both at the same time.

Bitcoin is quiet near $77,000. The AI IPO wave is pulling in capital. Hormuz is still managed, not open. Oil stocks are still falling.

Last week the market absorbed the pressure.

This week it has to justify the optimism.