Last week, the markets seemingly took in stride the uptick in the Consumer Price Index (CPI) in December, as the data below the surface was better than reflected by the headline number. In addition, the Core PPI (Producer Price Index ex. Food and Energy), which serves as a leading indicator for consumer prices in the short-term, declined last month, injecting a dose of optimism regarding the CPI’s trend.
Stock markets clocked in the first winning week of 2024. The Dow Jones Industrial Average (DJIA) was up by 0.8% and the S&P 500 (SPX) increased by 1.35%, edging back towards its record high. The technology benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) jumped by 2.14% and 2.2%, respectively. Stocks were helped by mostly positive earnings reports from major banks, as well as by the unexpected PPI decline, which strengthened expectations a for rate cut. Technology shares were boosted by the SPX’s largest company by weight, Microsoft (MSFT), which surged 5.1% on the week, overtaking Apple (AAPL) as the world’s most valuable company for the first time since November 2021. Meta Platforms (META), the sixth-largest holding in the index, also contributed to the strong weekly gain with a 5.6% upsurge.
In this holiday-shortened week (markets are closed Monday for Martin Luther King Jr. Day) investors will be focusing on economic reports in search of data points which may validate or disprove the current market expectations of an interest-rate cut as early as March.
Here are three economic events that could affect your portfolio this week. For a full listing of all upcoming economic events, check out the TipRanks Economic Calendar.
» December’s Retail Sales – Wednesday, 01/17 – This report, released by the U.S. Census Bureau, provides information on how much money consumers are spending on various durable and non-durable goods. Since the report tracks the amount of spending in an economy, it helps to gauge the economy’s health and consumer spending habits, as well as the level of the buy-side inflation pressures.
» December’s Industrial Production – Wednesday, 01/17 – This report, released by the Federal Reserve, shows the volume of production of U.S. industries like manufacturing, mining, and utilities. Although industrial production accounts for a smaller portion of the economic activity than services, its sensitivity to consumer demand and interest rates makes it a leading indicator of GDP growth and economic performance.
» January’s Michigan Consumer Sentiment Index and UoM 5-year Consumer Inflation Expectations (preliminary readings) – Friday, 01/19 – These reports, published by the University of Michigan, portray the results of a monthly survey of consumer confidence levels and consumers’ views of long-term inflation in the United States. The level of confidence affects consumer spending, which contributes about 70% of the U.S. GDP. The inflation expectations index is used as a component of the Fed’s calculations of the Index of Inflation Expectations.
