#StockMarket #CPIReport #FederalReserve
As the U.S. stock market continues to set new records, all eyes are on the upcoming Consumer Price Index (CPI) report scheduled for release on Thursday morning. This report will be a crucial test for the market, particularly after the S&P 500 reached an all-time high on Wednesday, with the index rising 0.71% and the Dow Jones Industrial Average surging over 400 points, or 1%.
Market participants are eagerly awaiting the CPI data to gauge whether inflation is easing. Economists predict a modest monthly increase of 0.1% and an annual inflation rate of 2.2%, which would indicate further progress toward the Federal Reserve's 2% target.
However, core inflation, excluding food and energy, is expected to remain higher at 3.2% annually and 0.2% monthly. This disparity could influence the Fed's decision on the pace of future rate reductions. The Fed recently cut the benchmark overnight borrowing rate by 50 basis points in September, but a strong jobs report has prompted officials to adopt a more cautious approach.
Lorie Logan, President of the Dallas Fed, warned that any unwarranted easing in financial conditions could boost spending and push aggregate demand, potentially leading to another surge in inflation. Logan emphasized the need for the Fed to advance cautiously while monitoring trends in financial conditions, consumption, wages, and prices.
The CPI report's impact will be significant for the Fed's policy decisions at its upcoming meeting in November. Current data from Fed funds futures trading suggests a 70% chance of a quarter-point interest rate reduction, according to the CME Group's FedWatch tool.
In addition to the CPI, other economic data scheduled for release on Thursday includes the weekly initial jobless claims figures. These metrics will provide further insights into the health of the labor market and its implications for monetary policy.
The recent stock market performance has been bolstered by the Fed's rate cuts, with sectors sensitive to rate changes, such as utilities and financial services, seeing notable gains. However, analysts caution that increased volatility is likely in the coming weeks due to elevated valuations and the potential for economic slowdowns.
As the market navigates these critical economic indicators, investors remain vigilant, aware that any surprises in the CPI report could significantly impact future market movements and the Fed's policy trajectory.
Original Article: https://www.cnbc.com/2024/10/09/stock-market-today-live-updates.html
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