Stocks got the week off on the right foot, highlighted by new record closes for the NASDAQ and S&P 500. However, the futures are pointing to a slightly negative start to today’s session. The major markets in Asia closed mostly lower in overnight trading. Meanwhile, stocks in Europe are trading in the red. Elsewhere, oil prices have trickled lower, with West Texas Intermediate down about 0.5%, to around $77.40 a barrel.
The main event this week is the two-day Federal Open Market Committee meeting, which wraps up on Wednesday. The year began with Wall Street expecting the Federal Reserve to make about half a dozen cuts to its overnight target lending rate. However, progress on the inflation front has stalled of late, with both consumer and producer price increases still running higher than the central bank would like. As a result, most market watchers expect the Fed to stand pat this week, and keep the rate unchanged through September, at least. Nonetheless, traders will be keen to hear what Chairman Jerome Powell has to say about the lead bank’s outlook.
Wednesday morning will bring the latest reading on the Consumer Price Index (CPI) from the Bureau of Labor Statistics. The consensus is largely calling for the 12-month rate through May to remain unchanged at 3.4%, but the month-over-month rate of increase is expected to tick down to 0.1%, versus 0.3% in April.
On Thursday, we get a few more inflation data points via the Producer Price Index (PPI), which measures the change in prices for manufactured goods. Forecasts are calling for the month-to-month figure to dip to around 0.1%, versus the 0.5% gain registered in April. Meanwhile, the core PPI (which excludes food and energy costs) is expected to edge down to 0.3%, from 0.5% the month before. That day will also bring the Department of Labor’s latest report on initial jobless claims, which are widely anticipated to dip to around 222,000, or 7,000 below the prior-week’s tally.
Summing up Monday’s moves for the major indexes, the Dow Jones Industrials advanced 69 points, or 0.2%, while the S&P 500 gained 13 points (0.3%) and the NASDAQ was up 59 points (0.4%). - 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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