Investors are alarmed by inflation data.
The three major US indexes started the day on a negative trend following the release of the Consumer Price Index (CPI) for January, which revealed a little higher reading than anticipated. Investors are now concerned that the Federal Reserve will continue to take a strict posture on monetary policy in the coming months as a result of this.
persistent inflation
The inflation data is proving to be consistent, according to Tom Hopkins, portfolio manager at BRI Wealth Management, and it is a key signal of the probable frequency of rate rises in the future. The Fed wants to get inflation back to where it should be, which is 2%.
Effects of a Healthy Labor Market
Hopkins noted that the surprisingly positive employment data from last month would motivate the Fed to tighten monetary policy more aggressively in order to control the economy. Fed officials have cautioned that this conclusion is unclear, despite the strong US job market and the steady reduction of inflation raising expectations of averting a recession.
Rise in Core Inflation
The core index, which does not include the food and energy components, increased by 0.4% MoM and met forecasts. Core inflation for the 12 months ending in January was 5.6%, higher than the forecasted 5.4%.
Effect on the Stock Market
The inflation report aroused some concerns, but pre-market trade in the futures for the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite increased. The relatively consistent 6.4% US CPI, according to Neal Keane, head of sales trading at ADSS, is making it difficult for the Fed to meet its 2% inflation objective.
CPI Release Is Coming
Prior to the expected publication of the January CPI at 8:30 am Eastern Time on Tuesday, pre-market trade in the Dow Jones Industrial Average, S&P 500, and Nasdaq-100 increased. Core inflation is predicted to decelerate to 5.4% and headline inflation to 6.2% in the anticipated publication.
Market Predictions
After the positive US labor statistics for January, the publication of today’s inflation data is critical for the market. An underwhelming or underwhelmingly underwhelming CPI number is likely to bolster stock bulls and drive the S&P 500 to fresh highs.
The Earnings Season is ongoing
Major corporations including Coca-Cola, AirBnB, and Marriott will be releasing their fourth-quarter results today as the earnings season continues. The market is keeping a careful eye on these outcomes as they develop.