Stocks End Lower, Big Three Indexes Within Striking Distance Of Recent Highs  Image: Bigstock Stocks closed lower yesterday in uneven trade. The Dow was down -0.62%, while the Nasdaq was only down -0.19%. The S&P was in the middle giving up -0.37%. The big 3 indexes are all within striking distance of last December's high. Last week's CPI and PPI inflation reports were bullish for the market as it showed inflation continues to ease.
We have one more inflation report to get thru before the next FOMC announcement of Jan 31. And that's the Personal Consumption Expenditures (PCE) index on January 26. That's the Fed's preferred inflation gauge, so all eyes will be on that. Although, with both the CPI and PPI reports easing, it's likely we'll see more of the same with the PCE. While nobody is expecting the Fed to cut rates when they meet at the end of the month, every data point that comes in that shows inflation is on the decline, helps support the idea of cutting rates sooner (March) rather than later (May). Either way, the PCE report is roughly 1½ weeks away. And the FOMC announcement is 2½ weeks away. In the meantime, we've got plenty of other data that can move the market, not the least of which is earnings season. While earnings season has already unofficially begun with many of the big banks reporting last week and yesterday, the official start of earnings season kicks off this week. And since stocks typically go up during earnings season, that bodes well for the market. In other news, yesterday's Empire State Manufacturing Index declined to -43.7 vs. last month's -14.5 and views for -4.7. (That was the lowest reading since May 2020.) Today we've got a busy day of economic reports with MBA Mortgage Applications, Retail Sales, Import and Export Prices, Industrial Production, Business Inventories, the Housing Market Index, the Atlanta Fed Business Inflation Expectations, and the Beige Book report. We'll also hear from the Fed's Michael Barr, and Michelle Bowman. Fed officials can move the market at times with their comments. Yesterday, Fed Governor Christopher Waller spoke and mentioned that interest rate cuts are likely this year, "as long as inflation doesn't rebound and stay elevated." But his measured tone suggested the Fed was in no hurry. He said, "when the time is right to begin lowering rates, I believe it should be lowered methodically and carefully." "In many previous cycles, ... the FOMC cut rates reactively and did so quickly and often by large amounts. This cycle, however, ... I see no reason to move as quickly or cut as rapidly as in the past." We'll see what the other two have to say today. A little bit of good news could help the market begin its next leg higher. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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