The major U.S. indexes began the week with modest gains, and the futures are suggesting a positive start to today’s session. In overnight trading, markets in Asia were up across the board, while the major European exchanges are also in the green. Meanwhile, oil prices have moved lower, with West Texas Intermediate falling about 1.0%, to around $70.60 a barrel.
The end-of-year stock rally has largely been driven by increased confidence that the Federal Reserve is likely finished with its long streak of interest rate increases. Today’s release of the Consumer Price Index (CPI) for November was somewhat mixed, with the data showing that year-over-year inflation came in at 3.1%, versus 3.2% the month before. However, on a month-to-month basis, the CPI reading increased 0.1%, after being unchanged in October. Also, excluding food and energy, the index was up 0.3% in November, after rising 0.2% the month before.
The central bank will have one more data point on inflation to consider with tomorrow morning’s release of November’s Producer Price Index (PPI), which measures the change in the price of goods sold by manufacturers. Wall Street analysts are looking for a month-over-month change of 0.1%, versus a drop of 0.5% recorded in October.
As it stands, the consensus continues to call for the Fed to stand pat when it wraps up its Federal Open Market Committee (FOMC) meeting tomorrow afternoon, keeping its overnight lending rate target at 5.25%-5.50%. Indeed, looking further out, market prognosticators believe there is a more than 40% chance that the Fed will begin to cut rates at its March, 2024 FOMC meeting.
Rounding out the economic calendar for the rest of this week, Thursday brings the Census Bureau’s retail sales figures for November. Expectations are calling for a month-over-month decline of 0.1%, on par with October’s results. Lastly, the Department of Labor is due to release its data on initial jobless claims on Thursday, with consensus there calling for an uptick to 221,000, an increase of 1,000 from the month before.
Summing up Monday’s market moves, the Dow Jones Industrials gained 157 points, or 0.4%, the S&P 500 was up 18 points (0.4%), and the tech-laden NASDAQ tacked on 28 points (0.2%). - 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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