The S&P 500 rose 1.4% last week to deliver its first ever weekly close above the 5000 handle. Stocks managed to navigate through a barrage of commentary from Federal Reserve officials, which predominantly emphasized the ongoing need for disinflation before any potential interest rate reductions.
The Dow Jones Industrial Average (DJI) ended the week flat after the bulls managed to erase intraweek losses. The Nasdaq Composite Index (IXIC) surged 2.3% to close in on a new record high above the 16000 mark.
Despite initial hopes, the likelihood of a rate cut in March has diminished, with the market consensus now shifting towards a possible cut no sooner than May. Furthermore, the Federal Reserve's projections continue to suggest the possibility of just three rate cuts in 2024.
Economic indicators released last week provided a mixed picture. Updates to the Purchasing Managers’ Index (PMI) for services sectors highlighted a robust economy, while figures for jobless claims suggested a strong, albeit decelerating, labor market.
Moreover, a decrease in consumer credit hinted at a decline in borrowing. The week was also marked by significant earnings announcements, adding another layer of complexity to market dynamics.
As we look to the week ahead, key economic data releases will likely play a pivotal role in shaping market movements. The Consumer Price Index (CPI) inflation data for January is due tomorrow and is a highly anticipated event as it could significantly influence the Federal Reserve's monetary policy decisions and, consequently, investor sentiment.
“The January Consumer Price Index (CPI) report should show ongoing progress on inflation. We forecast headline and core CPI rose by 0.2% m/m (0.16% unrounded) and 0.3%Read more on investing.com