The US consumer will be at the center of the holiday-strained week, with retail sales and bank earnings on deck as stocks digest this week’s slightly warmer inflation print and fall near record highs. Stocks posted their 10th week of gains in 11, even after December’s consumer inflation report came in stronger than expected, as tech stocks rallied. The tech-heavy Nasdaq Composite had its best week since November, rising more than 3%. The S&P 500 also climbed within striking distance of its record closing high set in January 2022. The broad market index rose 1.8% for the week and the Dow Jones Industrial Average edged up a slight one-week gain of 0.3% . Next week will be lighter in terms of economic data, but stocks may be volatile as Wall Street gains more insight into the state of the American consumer. One thing that can delay the recession, if not cancel the delayed recession, is the strength of consumer spending. … And I think retail sales will give us a taste of Americans’ willingness and ability to spend. chief US equity strategist at BCA Research Irene Tunkel Retail sales, bank earnings December retail sales data is expected on Wednesday. Economists polled by FactSet expect a 0.2% increase for the month, representing a slight decline from November’s 0.3% increase. Market bears calling for a recession argue that spending by US consumers – which has so far remained resilient in the face of rising inflation – will soon unravel after their savings are depleted. Those investors say earnings growth is unlikely to accelerate this year if the economy slows. Irene Tunkel, chief US equity strategist at BCA Research, expects the retail sales data to show how consumers – and by extension, the economy – continue to hold up. “One thing that can delay the recession, if not cancel the delayed recession, is the strength of consumer spending,” Tunkel said. “And I think retail sales will give us a taste of Americans’ willingness and ability to spend.” However, Tunkel sees the economy slipping into recession and the S&P 500 falling below 4,000 this year. “In a sense, it won’t change the trajectory that I’ve kind of outlined for 2024, but maybe it will give us a little more insight into the timing: How long is the runway?” Tunkel added. A still healthy consumer could suggest investors can take a riskier stance on stocks, while the opposite would be true if any weakness is identified, he said. December housing starts and building permit data will also be released on Thursday, giving a picture of whether activity in the sector has picked up as mortgage rates have fallen. U.S. housing starts, or new home construction, are expected to have fallen 7.1 percent, according to a FactSet consensus estimate. That would be down from a 14.8% rise in the previous month. With building permits, the number of new housing units approved in the U.S. is expected to have risen to 1.476 million units, according to economists polled by FactSet. That’s up from 1.467 million units the previous month. “We have to see if this fall in interest rates and the fall in mortgage rates will be enough to trigger the more cyclically sensitive sectors of the economy,” said Ross Mayfield, investment strategist at Baird. More bank earnings are also on deck, which could also provide insight into how consumers are spending and whether there are increased delinquencies. Big banks Goldman Sachs and Morgan Stanley will report on Monday, as well as a number of regional banks such as Citizens Financial and M & T Bank. “I think this information will be very complementary to what we’re hearing in terms of retail sales,” said BCA’s Tunkel. Looming Concerns Other concerns loom on the horizon next week for markets, including a possible government shutdown if the House and Senate do not reach a funding decision by the Jan. 19 deadline. This week, congressional leaders reached a $1.59 trillion deal on top-line spending. Failure to reach an agreement would trigger a significant move to de-risk the markets, but a shutdown is unlikely, according to Troy Gayeski, chief market strategist at FS Investments. “I think as usual, the markets are accurate in ignoring this as a significant driver of market performance,” Gayeski said. Instead, Gayeski will continue to monitor activity in Treasury yields after this week’s inflation data. The consumer price index rose more than expected last month, but the producer price index unexpectedly fell. For now, stocks seem to be shrugging off those concerns about higher interest rates, continuing to rally higher on expectations that the Fed will eventually cut rates later this year. But many investors question how long that can continue. “I think the favorable outcome for the market has almost been priced in, so I think right now the risk return on US equities is not positive,” said BCA’s Tunkel. “That might change at some point during the year, but I think if we talk now, that’s it.” Week Ahead Calendar All times ET. Monday January 15, 2024 Market Luther King Jr. Day Tuesday January 16, 2024 8:30 am Empire State Manufacturing Survey (January) Earnings: Morgan Stanley , Goldman Sachs Wednesday, January 17, 2024 8:30 AM December) 8:30 am Import Price Index (December) 8:30 am Retail Sales (December) 10am Business Inventories (November) 10 a.m. NAHB Housing Market Index (January) 2 p.m. FED Beige Book 3 p.m. Federal Reserve Bank of New York President and CEO John Williams delivers opening remarks at an “An economy that works for all: Measurement Matters” event, New York Fed Earnings: Discover Financial Services , US Bancorp , Citizens Financial Group , Charles Schwab Thursday January 18, 2024 8 am Preliminary Permits (December) 8:30 am Housing starts (December) 8:30 am Initial Claims (week ended January 13) 8:30 A.M. Philadelphia Fed Index (January) Earnings: JB Hunt Transport Services , PPG Industries , KeyCstenalp , M & T Bank , Northern Trust , Truist Financial Friday January 19, 2024 10 AM Existing Home Sales (December) 10am Michigan Sentiment NSA preliminary (January) Earnings: State Street , SLB , Fifth Third Bancorp , Regions Financial , Comerica — CNBC’s Alex Harring contributed to this report.