The U.S. markets began the week with sizable advances, but as we approach today’s opening bell, stock futures are suggesting the major indexes may give back some of those gains. In overnight trading, markets in Asia closed mostly up. Meanwhile, the major European exchanges are showing losses. Elsewhere, oil prices have moved higher, with West Texas Intermediate up about 3.0%, to around $72.80 a barrel.
Federal Reserve Governor Michelle Bowman, speaking at a community bankers’ conference on Monday, indicated that she believes the central bank is likely done raising interest rates. However, she added that we are not yet at the point where rates can start to be cut. Wall Street continues to lean toward sooner rather than later, with the Fed Funds Futures suggesting a nearly 60% chance of a quarter-point cut at the lead bank’s meeting in March.
This week, we’ll get to review a couple of key inflation readings that may give further insight into the Fed’s likely path in the months ahead. On Thursday, the U.S. Bureau of Labor Statistics is scheduled to release the Consumer Price Index (CPI) for December. The consensus among Wall Street analysts is calling for an uptick in the year-over-year rate of increase, to 3.2%, versus the 3.1% recorded in November. On a month-to-month basis, estimates are calling for an increase of 0.2%, up from 0.1% the month before.
This will be followed on Friday by the Producer Price Index (PPI), which measures the change in prices for goods and services sold by producers. There, the report is expected to show modest increases in inflation. On a 12-month basis, Wall Street is calling for an increase of 1.3% (versus 0.9% in November), and for the month-to-month increase to come in at 0.1%, compared to a flat reading the month before.
This week’s economic releases also include the Department of Labor’s report on initial jobless claims due out Thursday. There, analysts are looking for a reading of 210,000, versus 202,000 the week before. Lastly, but certainly not least, earnings season begins on Friday, led off by reports from Bank of America (BAC), Citigroup (C), JPMorgan (JPM), and Wells Fargo (WFC), among others.
Summing up Monday’s market moves, the Dow Jones Industrials climbed 216, or 0.6%. Meanwhile, the S&P 500 closed up 66 points (1.4%), and the tech-heavy NASDAQ led the pack, surging 319 points, for an impressive 2.2% advance. - Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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