Mid-Week Market Minute 1.10.24
Stocks Rally Early Week; Key Inflation Data This Week
Stocks began the week with a broad-based rally Monday, and then digested the positive trade mid-week as investors waited for key inflation data. Investors will look for clues on inflation from the December Consumer Price Index (CPI) and from producer prices (PPI), due this week. On Thursday, core CPI is expected to fall from 4.0% to 3.8% in December on a year-over-year basis, as the Fed continues to attempt to bring inflation down to their 2% target. In this environment, markets remain focused on Federal Reserve policy to assess the future path of interest rates and the ensuing effect on economic conditions. Stronger than expected job growth, along with minutes from the last Fed meeting, added uncertainty to the timing and magnitude of any interest rate cuts for 2024. As of now, futures markets assess about a 70% chance of a rate cut at the Fed’s March 20 meeting, with a total of about six rate cuts expected by the end of 2024. If realized, this would result in a funds rate of a range of 3.75%-4.00% by year-end.
On the earnings front, the Financials sector will be a focus for the market during the next two weeks as more than 70% of the S&P 500 companies are scheduled to report earnings for the fourth quarter over this period are part of this sector (Factset). Fourth-quarter earnings reports beginning this Friday include Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo. Other key earnings reports will come that day from UnitedHealthcare, Delta, and Blackrock as the fourth-quarter 2023 earnings season gears up.
Source: GSAM, CNBC, JPMorgan, Factset
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