The stock market is completely focused on the CPI, Fed Rates, and the strength of the economy.
The CPI headline number ticked up 0.1%, the annual rate continued its descent to 3.1%, offering a hope for a “Goldilocks” scenario – gentle economic growth, lower inflation, and eventual rate cuts.
Tomorrow, the Fed takes center stage. Every word will be analyzed by investors, searching for clues about a potential pivot towards rate cuts next year. The market is betting on it, with June emerging as the most likely starting point, though the timing remains fluid.
This optimism stems from the recent cooling of inflation, seemingly resilient consumer spending, strong jobs, and unwavering consumer confidence. Each data point adds weight to the soft-landing expectations, yet a definitive reversal remains elusive. The economy, despite its undeniable strength, faces uncertainties. Each day, uncertainties are becoming fewer and fewer.
Oracle’s after-hours tumble serves as a stark reminder of the market’s vulnerability. The tech giant’s missed revenue target sent its shares plummeting 7% premarket, highlighting the potential for individual company woes to disrupt the overall rally.
The market will be glued to the Fed’s actions and statements, economic data releases, and corporate earnings reports. The dance between inflation, interest rates, and economic growth will determine the next chapter of this market direction. Investors should remain optimistic and be ready to capitalize as opportunities present themselves. Growth and the expansion of the market participation rate will become a focus over the next few months.
Key points:
- Inflation, Fed rates, and economic strength are driving the market.
- CPI moderating: November CPI +0.1%, annual rate down to 3.1%.
- Optimism for continued decline and “soft landing”
- Market awaiting Fed confirmation of optimism tomorrow.