Stocks had a mixed start to the week and the futures are pointing to a slightly negative open for today’s session. In overnight trading, markets in Asia closed mixed. Meanwhile, stocks in Europe are hovering around the unchanged mark. Elsewhere, oil prices have edged lower, with West Texas Intermediate down about 0.5%, to around $78.75 a barrel.
With earnings season down to just a handful of key reports, the market’s focus has returned to the Federal Reserve and what its next moves might be. Investors began the year with hopes that the lead bank might do as many as six quarter-point cuts in 2023. But recent inflation data, which has come in hotter than expected, has dampened those hopes considerably. The changed outlook was underscored by comments from Fed Chairman Jerome Powell following the most recent Federal Open Market Committee (FOMC) meeting, in which he stated that further progress in bringing inflation down “is not assured and the path forward is uncertain.”
This morning, the U.S. Bureau of Labor Statistics released the Producer Price Index (PPI) for April, which indicated that wholesale prices advanced 0.5% month over month. This topped the Wall Street consensus of 0.3%, and the revised 0.1% decline recorded in March (previously +0.2%). On a 12-month basis, the PPI was up 2.2% through April, versus a 1.8% increase through March. Notably, this marked the largest 12-month advance since April of 2023 (+2.3%). The Consumer Price Index (CPI), will come out tomorrow morning. It is expected to show a year-over-year increase through April of around 3.4%, versus the 3.5% gain registered for the 12 months through March.
Wednesday also brings the Census Bureau’s report on retail sales for the month of April, where the consensus is calling for a month-to-month increase of 0.4%, down from 0.7% in March. The ‘core’ figure, which excludes automobiles, is expected to show a more dramatic deceleration, to 0.2%, versus an increase of 1.1% the month before. On Thursday, we’ll get two key reports on the homebuilding market. Analysts are looking for April housing starts to come in at an annualized pace of about 1.41 million units, up from 1.321 million in March. Meanwhile, building permits are also expected to show an uptick, to around 1.48 million, versus 1.467 million the month before.
Summing up Monday’s moves, the Dow Jones Industrials fell 81 points, or 0.2%, the S&P 500 was down one point (0.02%), and the tech-focused NASDAQ advanced 47 points (0.3%). - 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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