Markets enter a holiday-shortened U.S. week with several data points and corporate reports eyed for fresh clues about inflation, growth and the Federal Reserve's policy outlook. The lineup is headlined by the monthly personal consumption expenditures price gauge and an advance estimate of fourth-quarter gross domestic product, with the Fed's minutes and earnings from a retail giant and a major cybersecurity firm also in focus.
1. Core PCE and inflation readings
One of the most watched releases this week will be the monthly personal consumption expenditures price index, the inflation gauge the Federal Reserve follows closely. Forecasters expect the core PCE index to register 0.3% month-on-month for December, up from 0.2% in November. On an annual basis, the core PCE is projected at 3.0% year-on-year, compared with 2.8% previously, according to officials at the Bureau of Economic Analysis.
These figures will be parsed in the context of other recent inflation data. Separate readings earlier showed the headline consumer price index rose at a cooler-than-expected pace in January, a result that had supported market bets the Fed could move sooner toward cutting rates. Those bets were accelerated by the softer CPI print despite a stronger-than-expected jobs report earlier in the week, which had initially suggested the central bank might delay easing until later in the year.
2. Advance GDP for the October-December quarter
An advance estimate of U.S. economic growth for the October-December period is expected to show a moderation in activity. Economists anticipate a quarter-on-quarter gain of 2.8% for the fourth quarter of 2025, down from the 4.4% expansion recorded in the third quarter.
Throughout the prior quarter, consumer spending remained a primary engine of growth, consistent with its longstanding role in the U.S. economy. The moderation is expected even as a narrowing trade deficit - which the report notes was influenced in part by recent tariff policies - continued to support headline output.
Market observers have also drawn attention to the uneven nature of the recovery. The economy has been described by many as following a "K" shaped path, with higher-income households and corporations driving much of the expansion while lower-income Americans face persistent price pressures and a softer hiring environment. Small businesses, for their part, are contending with higher import costs and reduced access to lower-cost labor linked to an ongoing immigration crackdown.
Finally, developments related to artificial intelligence are cited as a growing influence. New AI tools have prompted volatility across a range of stocks, underscoring investor sensitivities about potential disruptions from the emerging technology.
3. Federal Reserve minutes
The Federal Reserve left the target range for its policy rate unchanged at its most recent January meeting. Policymakers cited signs of a firming labor market and inflation that remains above target as reasons for maintaining the federal funds rate at a 3.5% to 3.75% range.
Officials signaled a broadly unchanged stance for the near term and indicated a wait-and-see approach as they monitor the evolution of employment and price dynamics. Minutes from that meeting, due to be released on Wednesday, are expected to provide greater color on officials' deliberations and potential timing for future policy adjustments.
The meeting record will also reflect that two governors - Stephen Miran and Christopher Waller - dissented from the decision to hold rates and pause a series of rate reductions that had been underway since mid-2025. Those dissents could be closely examined for clues about the range of views inside the Fed.
At the same time, the leadership picture at the central bank is shifting. Fed Chair Jerome Powell is approaching the end of his term, and the White House has nominated former Fed Governor Kevin Warsh as his successor. Powell's term concludes in May, and markets are assessing whether the incoming nominee might take a different approach to rates.
4. Walmart's quarterly report
On the corporate front, Walmart will be among the most closely watched earnings reports this week. The big-box retailer's shares have climbed markedly this year, lifting its market capitalization above the $1 trillion threshold and making it the largest company in the consumer staples sector by market value.
Because consumer spending remains a central driver of U.S. growth, Walmart's results will be scrutinized for insight into household demand for essentials over the holiday shopping season. Given Walmart's position as a low-price provider of staple goods, its sales and margin trends can act as a barometer of consumer behavior and pricing pressures heading into upcoming retailer earnings seasons, which include companies such as Home Depot and Target.
5. Palo Alto Networks' quarterly update
Tech sector focus will turn to Palo Alto Networks when it reports after the close on Tuesday. The California-based cybersecurity company raised its full-year revenue and profit outlook in November, citing a surge in demand for its digital security products as organizations seek to counter online threats.
In addition, Palo Alto announced in November a $3.35 billion purchase of Chronosphere, a cloud management and monitoring business, and stated plans to fold Chronosphere into its Cortex AgentiX platform. The integration is intended to let Palo Alto’s AI agents tap Chronosphere’s data to detect performance problems and identify root causes.
The Chronosphere transaction, along with a separate deal for identity security firm CyberArk Software, is expected to close in the second half of Palo Alto’s fiscal 2026. Investors will look to the company’s upcoming results for any updated guidance or commentary on deal integration and demand trends across its product lines.
In sum, this compressed trading week offers a concentrated window into inflation dynamics, growth momentum and policy direction, alongside corporate updates that could influence sector positioning. Market participants will weigh these data points against recent labor-market strength and lingering above-target inflation as they reassess the timeline for monetary easing and the competitive landscape in retail and technology.