Stocks got the week off to a negative start Monday, receding from recent record highs. This morning’s futures for the major indexes indicated a mixed open for today’s session. Markets in Asia closed mostly higher overnight. Meanwhile the European indexes were showing modest losses.
Turning to the economic calendar for this week, the spotlight returns once again to the inflation front. On Wednesday, the U.S. Bureau of Labor Statistics is set to release its Consumer Price Index (CPI) for November. On a month-to-month basis, Wall Street is calling for price increases to hold steady with the October reading, rising 0.2%. On a 12-month basis, estimates are indicating a 2.7% increase, up a notch from the 2.6% rise logged the month before. Meanwhile, the core figure (which excludes food and energy costs) is expected to come in flat on the month over month and year to year comparisons, with gains of 0.3% and 3.3%, respectively.
This will be followed on Thursday with the release of the Producer Price Index (PPI) for last month. The consensus is pointing to a 0.3% monthly increase in wholesale prices, up from 0.2% in October. Meanwhile, the core PPI (also excluding food and energy) is anticipated to go in the opposite direction, stepping down to an increase of 0.2% in November, versus a gain of 0.3% the month before.
Lastly, Thursday will also bring the latest count on initial jobless claims. Analyst forecasts are indicating a modest downtick to 221,000, compared to the 224,000 reported for last week.
If the inflation and employment numbers match expectations, it appears unlikely that the Federal Reserve will reverse its current course of action on the monetary policy front. The fed funds futures are now suggesting a greater than 85% chance that the lead bank will trim its target lending rate by a quarter percentage point, to a range of 4.25%-4.50%, at its next meeting which concludes on Wednesday the 18th.
Summing up Monday’s moves for the major stock indexes, the Dow Jones Industrials fell 240 points, or 0.5%, the S&P 500 lost 37 points (0.6%), and the NASDAQ closed down 123 points (0.6%). – 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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