The major market indexes started the week on a positive foot. However, after President Trump signed orders for 25% tariffs on steel and aluminum imports on Monday evening, this morning’s futures were suggesting stocks might give back some of those gains at the opening bell. In overnight trading, stocks in Asia were mixed. Meanwhile, the European indexes were mostly showing modest gains.
This week’s economic calendar includes two key inflation reports. On Wednesday, the Bureau of Labor Statistics will release its Consumer Price Index (CPI) for last month. Wall Street forecasts were calling for a year-over-year increase of 2.9%, which would match the rate for the 12-month period ended in January. On a month-over-month basis, the consensus is looking for a 0.3% increase in January, down from the 0.4% gain recorded for December. On a core basis (which excludes food and energy prices), the 12-month figure is expected to a show a 3.1% increase, compared to the 3.2% reported through December. The month-to-month change is forecast to remain flat at 0.3%.
On Thursday, we’ll get the Producer Price Index for January. Analysts foresee a month-to-month increase of 0.3%, up slightly from the 0.2% logged in December. On a core basis, the consensus is calling for a 0.3% increase, versus the flat reading in December.
If inflation comes in close to the above expectations, it’s not likely to sway the Federal Reserve either way at its next meeting in mid-March. At this time, the fed fund futures are indicating a 93% chance that the central bank will keep its overnight lending rate unchanged at 4.25%-4.50%. Indeed, market prognosticators are leaning toward no changes until July, where a quarter point cut is anticipated.
That same day, we’ll also get the Department of Labor’s latest on initial unemployment claims. Estimates suggest an uptick to 221,000 claims, versus 219,000 the week before.
Moving on to Friday, the Census Bureau is due to release its Retail Sales report for January. There, the Street is looking for no change on a month-over-month basis, down from a 0.4% increase in December. Excluding autos, the core number is expected to show an increase of about 0.3%, down slightly from the 0.4% notched in December.
Lastly, earnings season continues apace. Among the top names reporting this week are Cisco (CSCO) on Wednesday, and Applied Materials (AMAT) and Deere & Co. (DE) on Thursday.
Summing up Monday’s price moves, the Dow Jones Industrials advanced 167 points, for a 0.4% gain, the S&P was up 40 points (0.7%), and the tech-heavy NASDAQ ended the day 190 points higher (1.0%). –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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