Wall Street Week Ahead: Rocky US stock market faces inflation data test
Donald Trump's tariffs.
Despite a gain on Friday, the benchmark S&P 500 marked its worst week in six months. The tech-heavy Nasdaq Composite on Thursday ended down more than 10% from its December all-time closing high, confirming it has been in a correction for several months. Investors were grappling with dramatic policy change around the world. Trump's back-and-forth implementation of fresh tariffs on Mexico, Canada and China exacerbated broad concerns about the economy. Markets were also shaken by Germany's surprise spending plans, which drove a selloff in the benchmark German Bund.
As recent U.S. economic data has disappointed, one silver lining for stocks has been markets factoring in more interest rate cuts by the Federal Reserve this year to account for potential growth weakening.
But Wednesday's U.S. consumer price index report could scuttle those expectations if it confirms that inflation is still simmering at levels that force the Fed to keep monetary policy tighter.
«A hot CPI print will likely scare the market,» said Bryant VanCronkhite, senior portfolio manager at Allspring Global Investments. «The market still wants the Fed to come to the rescue… Until inflation and inflation expectations come down, the Fed is handcuffed.»
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