The Dow Jones Industrials (DJINDICES: ^DJI ) start the new week at a higher level than they've ever been at before, as optimistic investors continue to drive the average to new record highs. For the most part, stock market investors are pleased with the progress that they've seen on the U.S. economic front, with superior performance compared to many other parts of the world helping the Dow stand out from its international peers. Yet investors need to keep their eyes on three key events this week and how they could particularly affect Wal-Mart (NYSE: WMT ) , ExxonMobil (NYSE: XOM ) , and Nike (NYSE: NKE ) . Let's take a look at them.
1. Retail sales
On Thursday, May's data on retail sales will come out. After a strong recovery in February and March, the most recent April numbers were unexpectedly weak, raising some concerns about the overall sustainability of the U.S. economic expansion. Yet we already know one key component of retail sales, as car, truck, and other motor vehicle sales jumped almost 5% in May, suggesting that the overall retail sales number could be strong as well.
Still, Dow component Wal-Mart needs to see a particularly good number on the retail sales front in order to reassure its investors that the consumer economy isn't abandoning the big-box retailer. Wal-Mart has had great difficulty convincing customers to keep spending, with particular pressure on the low-income customer base that helped Wal-Mart grow to its current size. If the consumer gives up on Wal-Mart, it could mean that the retailer's best days are behind it -- and it could have ripple effects throughout the consumer-goods sector.
2. Producer price index
Investors will get their latest read on inflation on Friday, with the wholesale-level Producer Price Index on tap. April's number was troublesome, with an overall jump of 0.6% in April and a 0.5% rise in the core rate excluding food and energy. But few expect May to repeat that high number, with consensus figures calling for a modest 0.1% rise.
Rising crude oil prices have been a big part of the rise in the PPI over the past year, and ExxonMobil and its oil-company peers have clearly benefited from supported prices that have helped minimize the impact of production challenge. If crude oil prices start to fall, then the big question for ExxonMobil will be whether its exploration and production business will lose more money than its downstream refinery and marketing business can make. At least for now, the answer is almost certainly yes, and thus Exxon needs to see prices maintain current levels as long as possible.
3. The World Cup begins
Thursday marks the beginning of the World Cup in Brazil, as the host country plays Croatia to begin the month-long world soccer championship. The event draws unparalleled attention globally, and even though the U.S. is an outlier in its relative disinterest in soccer, Dow component Nike has invested huge amounts in an attempt to gain success from the World Cup. More than a quarter of the 32 teams in the tournament have sponsorship arrangements with Nike, as the company tries to upend rival Adidas with an ambitious foray into the soccer world. With an audience of billions, Nike needs to avoid controversy and also needs a little luck from its highest-profile player endorsements in order to make the most of the opportunity.
These events won't be the only things that move the Dow Jones Industrials this week, but they're worth watching. By being aware of these events in advance, you can preplan your strategy and take advantage of those who get caught by surprise.
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