Stocks Closed Higher Yesterday, CPI Inflation Report Comes Out This Morning  Image: Bigstock Stocks closed higher again yesterday with all of the major indexes in the green. There was not much in the way of economic reports out yesterday, other than the NFIB Small Business Optimism Index. That came in at 91.0, up from last month's reading of 89.4 and views for 89.8. Last week's Employment Situation report continued to underpin the market. It showed a still strong jobs market. Not as red-hot as before. But that's a good thing. And while it likely gave the Fed more reason to raise rates another 25 basis points later this month, there's still two more employment reports coming out before their following meeting in September. But the report everybody will be watching today is the Consumer Price Index (CPI) inflation report. The last report showed core inflation (ex-food and energy) at 5.3% y/y vs. last year's peak of 6.6%.
The consensus for today is for the headline number to be up 0.3% m/m. On a y/y basis, the consensus is for 3.1%, marking a sizeable drop vs. last month's 4.0%. The core rate is expected to be up 0.3% m/m, while the y/y rate is forecast at 5.0% vs. last month's 5.3%. A better than expected reading should be cheered by the market. But we'll get another inflation report tomorrow with the Producer Price Index (PPI). Both the CPI (retail inflation) and the PPI (wholesale inflation) have essentially been moving in the same direction (down). But they don't always move in lockstep. And with the Fed so focused on inflation, nobody wants to take any of these reports for granted. Nonetheless, the CPI today is expected to show continued easing in the y/y rate. In addition to the CPI today, we'll also get MBA Mortgage Applications, the Atlanta Fed Business Inflation Expectations report, and the Beige Book report. Could be a busy day. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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