Consumer Price Index (CPI) shows uptick in December
Last week, the markets seemingly took in stride the uptick in the Consumer Price Index (CPI) in December, as the data below the surface was better than reflected by the headline number. In addition, the Core PPI (Producer Price Index ex. Food and Energy), which serves as a leading indicator for consumer prices in the short-term, declined last month, injecting a dose of optimism regarding the CPI’s trend.
Core PPI decline injects optimism into CPI trend
The Core PPI, which excludes food and energy, declined last month, injecting some optimism into the trend of the Consumer Price Index (CPI). This decline in producer prices suggests that inflationary pressures may not be as pronounced as initially thought. It is an encouraging sign for the economy and may alleviate concerns about the potential for a sustained uptick in consumer prices.
Stock markets rally in first winning week of 2024
Stock markets started the year on a positive note, with the first winning week of 2024. The Dow Jones Industrial Average (DJIA) was up by 0.8%, and the S&P 500 (SPX) increased by 1.35%, edging back towards its record high. The technology benchmarks, Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX), jumped by 2.14% and 2.2%, respectively.
Economic events to watch for potential interest-rate cut
In this holiday-shortened week (markets are closed Monday for Martin Luther King Jr. Day), investors will be focusing on economic reports in search of data points that may validate or disprove the current market expectations of an interest-rate cut as early as March. Market participants will be looking for evidence of economic strength or weakness to help inform their investment decisions and gauge the likelihood of a rate cut.
Key economic reports to impact portfolio this week
Here are three economic events that could affect your portfolio this week. For a full listing of all upcoming economic events, check out the TipRanks Economic Calendar.
- December’s Retail Sales – Wednesday, 01/17 – This report provides information on how much money consumers are spending on various durable and non-durable goods. It helps gauge the economy’s health, consumer spending habits, and buy-side inflation pressures.
- December’s Industrial Production – Wednesday, 01/17 – This report shows the volume of production of U.S. industries like manufacturing, mining, and utilities. It serves as a leading indicator of GDP growth and economic performance.
- January’s Michigan Consumer Sentiment Index and UoM 5-year Consumer Inflation Expectations (preliminary readings) – Friday, 01/19 – These reports portray the results of a monthly survey of consumer confidence levels and consumers’ views of long-term inflation in the United States. They affect consumer spending and are used as components of the Fed’s calculations of inflation expectations.
Investors should pay attention to these key economic reports to gain insights into the state of the economy and make informed investment decisions.
Analyst comment
The news can be evaluated as neutral. The uptick in the Consumer Price Index (CPI) in December had better data below the surface, with the Core PPI declining, injecting optimism into the trend of the CPI. The stock markets had a positive start to the year, rallying in the first winning week of 2024. Economic events to watch include reports on retail sales, industrial production, and consumer sentiment, which will impact investor decisions and provide insights into the state of the economy.
