Stocks End Lower, On Pace For Losing Week After 2 Up Weeks In A Row Image: Bigstock Stocks closed lower again yesterday, with the major indexes on pace to close lower for the week. Last week's better than expected CPI inflation report lifted stocks. But this week's better than expected PPI inflation report was not able to do the same, as it was overshadowed by a disappointing Retail Sales report, and Industrial Production numbers. Wednesday's comments by Federal Reserve Bank of St. Louis President James Bullard didn't help matters, when he said he thought the Fed should raise rates by 50 basis points at the next 2-day meeting which concludes on 2/1. Yesterday's comments by Federal Reserve Governor, Lael Brainard, weren't as hawkish. But she stressed that the Fed was "determined to stay the course" to bring inflation down to 2%. Markets are pricing in more than a 94% certainty that the Fed will raise rates by 25 basis points when they next meet in 2 weeks. Although, in spite of the Fed recently upping their terminal rate projections to 5.1%, and noted Fed hawk, Bullard, saying he thought they should go to a 5.25% - 5.50% range, fed fund traders, at the moment, appear to be expecting the Fed to hit the brakes at 4.75% - 5.00%. We will get another look at inflation next week when we get the Personal Consumption Expenditures (PCE) report, which is the Fed's preferred inflation gauge. And then the week after that, on Wednesday, 2/1, the Fed will make their announcement on their next interest rate hike. And likely provide an estimate on where and when they see their rate hikes ending. In other news, yesterday's Housing Starts and Permits report saw starts come in at 1.382 million units (annualized) vs. last month's 1.401M, and permits coming in at 1.330M vs. last month's 1.351M. The Philadelphia Fed Manufacturing Index improved to -8.9 vs. last month's -13.7 and views for -10.3. And Weekly Jobless Claims fell by another -15,000 to 190,000 (a 4-month low). Today we'll get Existing Home Sales, and the Baker Hughes Rig Count report. We'll also get more earnings. After the close yesterday, Netflix posted a negative EPS surprise of -74.5%, but a positive sales surprise of 0.18%. The real surprise, however, was the 7.66 million new subscribers they added, which far surpassed estimates for 4.5 million. NFLX was up nearly 7% in after-hours trade. Today we'll hear from oil firm Schlumberger, and finance companies State Street, and Regions Financial, along with 20 other companies. Stocks have gotten off to a great start this year with the first two weeks finishing sharply higher. This week, not so much. Let's see what today's economic data and earnings data looks like, and how the week finishes. Best, Kevin Matras Executive Vice President, Zacks Investment Research |
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