Marketbites: CPI Causes Indecisive Trading
Portfolio Manager Commentary:
Stocks closed higher Thursday with all three benchmark indexes posting gains. That followed a seesaw trading day in which traders were indecisive on how they felt about the latest inflation data. Inflation rose 6.5% in December from a year earlier which is in line with what economists had projected. But all eyes were on supercore inflation which had a complicated verdict and was likely the main reason for the indecisive trading.
Earnings season kicks into full gear today with results from big bank stocks JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America. Investors will monitor the releases, which are expected to offer more insight into the health of the economy and set the tone for earnings season. Delta Air Lines, BlackRock, UnitedHealth are also set to report Friday. Consumer sentiment data is due later in the morning.
Chart of the Day:
U.S. inflation slowed moderately in December for the sixth straight month following a mid-2022 peak as the Fed's aggressive interest rate hikes appear to be successful thus far. The consumer-price index, a measurement of what consumers pay for goods and services, rose 6.5% last month from a year earlier, down from 7.1% in November and well below a 9.1% peak in June. The figures show that inflation is turning a corner and that the Fed should be on track to reduce the size of interest-rate increases. They will likely reduce the rate hike to a quarter-percentage-point at their meeting that concludes on Feb. 1, down from a half-percentage point increase in December.
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