Few things moved the U.S. stock market last year like inflation data and the next reading is due this week.
Under the spotlight is the January consumer price index, which is set to be released at 8:30 am Eastern on Tuesday. Traders are expecting the data to provide more clues on whether the Federal Reserve may pause its interest rate hikes later this year in its combat with inflation that was running at a 40-year high last year.When the August inflation data arrived hotter than expected on Sept. 13, the S&P 500 and Nasdaq Composite plunged 4.3% and 5.
The inflation data for January and the following months especially matters, as it may point to whether the Fed could successfully steer the U.S. economy to a “soft landing,” where inflation falls while unemployment remains low, according to Scott Ladner, chief investment officer at Horizon Investments.
Powell has been sending a message that as long as inflation continues to ease, the Fed will allow economic growth to remain robust, according to Horizon’s Ladner.That being said, the market is not as scared of CPI reports anymore, as the annual rate of inflation had fallen for six months in a row, said Brian Overby, senior markets strategist at Ally. “The market used to be so intently nervous about CPI,” Overby said.
The data comes after the stock market’s 2023 rally stalled in the past week. The Nasdaq Composite saw a 2.4% fall, ending a string of five straight weekly gains, while the S&P 500 shed 1.1% and the Dow lost 0.2%. Stocks remain up solidly for the new year.Economists polled by the Wall Street Journal forecast a 0.4% increase in the January CPI, which would slow the year-over-year rate to 6.2% from 6.5% in December. Year-over-year CPI peaked at a roughly 40-year high of 9.1% last summer.
Louis Navellier, founder and chief investment officer at Navellier & Associates, said he is paying particular attention to owners’ equivalent rent, which is part of the shelter component of CPI. It’s rise accelerated from November to December and the Fed “really does want to see that fall, because that’s the last bit of inflation we need to fall,” Navellier said.
CPI 6.1%
And MARKETWATCH give Biden a pass on crashing the market in 2022
There is zero chance that anyone who understands how these numbers are arrived at, will give a Flying F. The reaction to the hocus pocus (in the back side) is all that will matter.
What they need to know is democrats are going to hugely raise your taxes for gender reassignment surgery and other leftist causes.
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