Stocks End Mixed, Fed Still Sees Strong Growth And Moderating Inflation _broker_advice_1010_565x377.jpg) Image: Bigstock Stocks closed mixed yesterday. After opening higher, only the Dow and S&P were able to hang on to their gains while the Nasdaq closed lower. And once again, the small-cap Russell 2000 led on the way down with a -1.63% loss. The economy continues to improve. That was underscored by yesterday's MBA Mortgage Applications report which gained 16.0% w/w (+8.0% for purchases and +20.0% for refi's). Although, the PPI-Final Demand report showed a larger than expected increase (inflation) with the m/m gain of 1.0% vs. views for 0.6%, and a y/y gain of 7.3% vs. views for 6.8%. (Ex-Food & Energy, it was only up 5.6%, but still higher than expectations for 5.1%.) But the Atlanta Fed Business Inflation Expectations slipped to a 2.8% y/y increase vs. last month's snapshot of 3.0%. Fed Chairman Jerome Powell, in his Semiannual Monetary Policy Testimony before the House Financial Services Committee, still sees inflation as transitory, and expects it to moderate in the coming months as the temporary base effects "drop out of the 12-month calculation." (In other words, the small inflation readings last year at this time, are exacerbating this year's higher readings due to the easy comparisons.) He also went on to say that the economy is recovering robustly and he expects that to continue. And that the jobs market should continue to strengthen as well. That being said, he still sees the Fed maintaining their easy monetary policy, but is "prepared to adjust the stance of monetary policy as appropriate," if inflation were to "materially and persistently" heat up "beyond levels consistent with our goal." Essentially, he gave a very dovish testimony which was in line with the recent FOMC minutes: economy is growing, but still more to go; inflation is up, but temporary; rates are expected stay near zero for the next 1½ years (or more), and they will likely start reducing their bond purchases later this year, maybe. Mr. Powell will address the Senate today. We'll also get Weekly Jobless Claims, the Philadelphia Fed Manufacturing Index, the Empire State Manufacturing Index, and Industrial Production. And more earnings. In fact, even though earnings season has unofficially been underway for a couple of weeks now, it 'officially' kicks off today when Alcoa reports after the close. Earnings is always an exciting time since stocks usually go up during earnings season. And it's not uncommon to see individual stocks move 10%, 15%, 20%, or more in one day after an earnings report. The key is getting into the right stocks. If you want to learn how to potentially find big winners this earnings season BEFORE they report, be sure to read our latest commentary... 3 Secrets to Quick Profits this Earnings Season Best,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
_4140_75x75.jpg)
Post a Comment
Post a Comment