The market got the week off to a positive start, but stock futures are suggesting the major indexes may give up some ground at today’s open. In overnight trading, markets in Asia closed mostly higher. Meanwhile, the major European markets are mixed. Elsewhere, oil prices have edged lower, with West Texas Intermediate down about 0.2%, to around $82.60 a barrel.
The Federal Reserve is back in the spotlight this week, as its two-day policy meeting kicks off today. Investors were in high spirits coming into the year, as the central bank had signaled that there would be three rate cuts in 2024, and some were speculating that there could be as many as six quarter-point cuts. However, recent inflation data has deflated some of those expectations. Specifically, the Consumer Price Index (CPI) for February showed a 0.4% month-to-month increase, and was up 3.2% on a 12-month basis, topping Wall Street consensus estimates. This reacceleration was echoed in the companion report for the Producer Price Index (PPI), which was up 0.6% on a month-over-month basis, and 1.6% year to year. Although Fed Chairman Jerome Powell recently stated that the lead bank was close to cutting its overnight lending rate, fed-fund futures are suggesting that there won’t be any cuts until the June policy meeting, and even then they only point to a 50% chance of a quarter-percentage-point reduction.
Earlier this morning, the Census Bureau reported that housing starts for February came in at a seasonally adjusted annual rate of 1.521 million. This is 10.7% above the revised January estimate of 1.374 million (previously 1.331 million), and 5.9% higher than the 1.436 million reported a year earlier. Meanwhile, building permits (which are a forward-looking indicator) came in at an annualized rate of 1.518 million. This is 1.9% higher than the January rate of 1.489 million, and 2.4% above the February, 2023 rate of 1.482 million.
Looking at the rest of the week, on Thursday the Department of Labor will release its weekly report on initial jobless claims. Analysts are calling for an increase to 214,000, versus the 209,000 tally registered the week before. That same day, the National Association of Realtors will announce its figures for existing home sales for February. Market watchers are calling for a slight reduction, to an annualized rate of about 3.95 million units, compared to a reading of 4.0 million in January.
Summing up Monday’s moves for the major indexes, the Dow Jones Industrials climbed 75 points, or 0.2%, the S&P 500 gained 32 points (0.6%), and the tech-focused NASDAQ advanced 130 points (0.8%). - 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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