Stocks Up On Better Than Expected Inflation Report, Fed Announcement This Afternoon  Image: Bigstock Stocks closed solidly higher again yesterday after a better than expected inflation report. Yesterday's Consumer Price Index (CPI) inflation report showed headline inflation up 0.1% m/m vs. the consensus for 0.3%. On a y/y basis it came in at 7.1% vs. last month's 7.7% and views for 7.3%. The core rate (ex-food & energy) was up 0.2% m/m vs. the consensus for 0.4%. And on a y/y basis it came in at 6.0% vs. last month's 6.3% and views for 6.1%. Another inflation report showing inflation is going in the right direction (down). The better than expected CPI report comes on the heels of last week's Producer Price Index (PPI) inflation report which also showed inflation trending lower. Inflation is still too high. And it's going down slower than some would like. But it is going down. And because of that, the consensus is still for the Fed to slow their rate hike pace this afternoon when they're widely expected to raise rates by just 50 basis points rather than 75 bps. If so, with the Fed Funds midpoint now at 3.88%, that would put it at 4.38%, which is consistent with their end of year target of 4.40%. They previously put their 2023 target at 4.60%. But recent comments have some speculating that it could go as high as 5.0%. So that's the real unknown. How high will they go next year before they stop raising and just hold it there for a while? (That's the terminal rate.) And traders will be listening for any clues when the Fed makes their announcement this afternoon. The FOMC Announcement comes out at 2:00 PM ET. And Fed Chair, Jerome Powell, will give his customary Press Conference afterwards at 2:30 PM ET. In other news, yesterday's NFIB Small Business Optimism Index came in at 91.9 vs. last month's 91.3 and estimates for 90.8. In addition to this afternoon's Fed announcement, we'll also get MBA Mortgage Applications, Import and Export Prices, and the Atlanta Fed Business Inflation Expectations report. But the main event will undoubtedly be the FOMC Announcement. Stocks have been performing well. No surprise there as the seasonal tendencies remain favorable: Q4 is typically the best quarter for stocks. December is one of the best months for stocks. And the post-midterm effect on the market is also positive. (And that goes for next year too.) Nonetheless, all eyes will be on the Fed today. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
Tidak ada komentar:
Posting Komentar