Stocks Up Again, All Eyes On Inflation This Morning And The Fed This Afternoon  Image: Bigstock Stocks closed higher again yesterday with the big three indexes all in the green, and the Nasdaq leading the way. Yesterday's Consumer Price Index (CPI) (retail inflation) showed that inflation continues to ease, although the decline does seem to be slowing. Nonetheless, the headline number was up 0.1% m/m, slightly higher than the 0.0% expected, but the y/y rate ticked down to 3.1% vs. last month's 3.2%. The core rate (ex-food & energy) was up 0.3% m/m, in line with the consensus, while the y/y rate came in at 4.0%, which was the same as last month and views for the same.
Today we'll get the Produce Price Index (PPI) (wholesale inflation). The headline number is expected to be up 0.1% m/m, while the y/y rate is expected to come in lower at 1.0% vs. last month's 1.3%. The core rate is expected to be up 0.2% m/m, with the y/y rate ticking down to 2.2% vs. last month's 2.4%. Another report showing inflation on the decline should underscore to the Fed that while inflation is still too high, it's definitely easing. And that they can likely end their rate hike cycle.
This afternoon we'll hear from the Fed and their decision on rates. Although, they are nearly certain to pause once again, with Fed Funds traders giving it a 97.1% probability that they leave rates unchanged. But what everybody is really waiting on is what the Fed has to say about their expectations for rate cuts next year. They have previously said they expect to cut rates by -50 basis points in 2024. But many analysts are expecting -125 basis points, with some expecting even more. Moreover, will they give us a time frame for when this pivot is likely to happen? We may get some of those answers in their FOMC announcement at 2:00 PM ET. Or at Fed Chair, Jerome Powell's, press conference shortly thereafter at 2:30 PM ET. In addition to today's PPI report, and Fed news, we'll also get MBA Mortgage Applications. The Q4 rally just keeps on going. The S&P is now just 3.63% away from it's all-time highs.
With a little less than 3 weeks left to go in the year, we could very well see new highs before 2023 is over.
It's been 22 long months since those highs were put in. And we could finally see that record being broken. With December typically being a strong month, and with the latter half of the month usually performing the best, we could see new highs and then some. And with interest rates likely on the decline next year, it looks like 2024 could be another bullish year for the market. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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