Stocks Ended Higher As Inflation Ticked Lower Image: Bigstock Stocks closed higher yesterday after a mostly better than expected inflation report. Yesterday's Consumer Price Index (CPI) report showed inflation actually declined -0.1% m/m vs. views for a 0.0% change. On a y/y basis, it was up 'just' 6.5% vs. the consensus for 6.6% and last month's 7.1%. The core rate (ex-food & energy) was up 0.3% m/m (as expected), and 5.7% y/y (as expected). That continues the trend of declining inflation readings. Last month's report showed headline inflation at 7.1%, and their summer high was 9.1%. Core inflation was at 6.0% in last month's report, with their summer high of 6.5%. Inflation is still too high. But the steady decline shows the Fed's actions are having an impact. The big question will be if the Fed opts to raise rates by a further reduced 25 basis points on February 1, or stay at 50 bps like in December. We have 2½ more weeks to ponder this, and a couple more inflation reports to get through before that question gets answered. In other news, Weekly Jobless Claims were down by -1,000 at 205,000 vs. views for 215K. Today we'll get Import and Export Prices and Consumer Sentiment. And we'll get more earnings. It will be a busy day with plenty of financial heavyweights on deck to report, including Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, and Blackrock. We'll also hear from Delta Airlines, and health care giant UnitedHealth Group. The major indexes are all up for the week (so far). And barring any surprises today, that will make it 2 up weeks in a row for the Dow, S&P, and the Nasdaq. And 3 weeks in a row for the small-cap Russell 2000. Best, Kevin Matras Executive Vice President, Zacks Investment Research |
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