Stocks slip, dollar rises ahead of US inflation data
By Sinéad Carew
NEW YORK (Reuters) -A global equities index fell slightly on Wednesday while Treasury yields edged down and the dollar rose against a basket of currencies on caution the day before U.S. inflation data that could influence Federal Reserve policy.
January's U.S. personal consumption expenditures price index (PCE), the Fed's preferred inflation measure, is due on Thursday. Economists polled by Reuters poll expect the index to have risen 0.3% on a monthly basis after a 0.2% increase in December.
Traders have already dialed back expectations for Fed interest rate cuts after a slew of strong data, including hot consumer price index (CPI) and producer price index (PPI) readings. They expect an easing cycle to kick off in June, compared with the start of 2024 when bets were on March.
«We're on hold until we get the PCE print. The market's going to chop around,» said Jack Janasiewicz, portfolio manager and lead porfolio strategist at Natixis Investment Managers Solutions. «Between CPI and PPI there's a narrative that inflation is going to be stickier than expected or even potentially having a modest re-acceleration.»
He noted that U.S. stock indexes remained not far from records reached last week, partly thanks to a better-than-expected fourth-quarter earnings season including a boost from Nvidia (NASDAQ:NVDA) on optimism about artificial intelligence.
«The market's had every chance to sell off but it's holding up pretty well,» he said. «It's actually been looking past inflation to an extent because earnings has been better than expected.»
Other data this week that may shape expectations on Fed policy include a second estimate of gross domestic product, jobless claims and manufacturing activity.
MSCI's gauge of
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