NEW YORK -Investors will focus in the coming week on whether inflation trends can help sustain the record-breaking stock rally that has received a boost from Donald Trump's victory in the U.S. presidential race.surged to an all-time high and hit the 6,000 level for the first time on Friday, as expectations of tax cuts and looser regulations under Trump helped lift the appetite for equities.
The Nov. 13 consumer price index report needs to"confirm that notion that inflation continues to head in the right direction," said Art Hogan, chief market strategist at B Riley Wealth. CPI for October is expected to come in at an annual pace of 2.6%, according to economists polled by Reuters. That would be a slight uptick from the 2.4% pace in September, which was the smallest gain since 2021, but well below the four-decade highs reached in 2022 that led the Fed to hike interest rates.
Expectations of financial easing have helped boost stocks this year, along with solid corporate profits and excitement over the business potential of artificial intelligence. Michael Reynolds, vice president of investment strategy at Glenmede, said the neutral level for the Fed funds rate was about 3%,"and we ultimately expect the Fed to stop short of neutral.""We ultimately think that they do take that shallow path because inflation is still a risk," Reynolds said.