As markets look ahead to tomorrow’s Consumer Price Index (CPI) report from the Bureau of Labor Statistics, analysts are expecting a 0.4% monthly increase and a 6.2% year-over-year reading.[0] Core CPI, which excludes volatile food and energy costs, is expected to rise 0.3%, with the year-over-year rate at 5.4%.[1] These expectations come on the heels of the Federal Reserve’s acknowledgment that the “disinflationary process” is underway.[2]
Data from the New York Federal Reserve’s consumer survey showed that expectations for inflation in 2023 are unchanged from 5% in December.[3] The expected level of inflation three years from now stood at 2.7%, while inflation five years from now was projected to be 2.5%.[3]
[4] On Monday, the Cleveland Fed’s model projected that the headline CPI would increase 0.65% from the previous month, amounting to a yearly growth of 6.5%.[4] [5]
Meanwhile, Federal Reserve Chair Jerome Powell has said that the fight against inflation has “a long way to go,” citing the jobs data.[6] That could have an impact on stock index futures as investors await the inflation data.
In single-stock news, Meta Platforms Inc. shares rose 3% after the Financial Times reported that the company had delayed setting up some team budgets as it prepares for a new round of job cuts.[7] CEO Mark Zuckerberg has announced that 11,000 pink slips were issued in November in an effort to make 2023 Meta’s “Year of Efficiency.” Now, an additional batch of potential pink slips has been issued in order to achieve this goal.[7]
Overall, investors are keeping a keen eye on the CPI report for indications of inflation and the Fed’s policy outlook. Should the report show a higher-than-expected growth in inflation, it could lead to a reversal of the market optimism that rate hikes would soon ease and ignite investor concerns that high inflation and Fed rate hikes will define the markets in 2023 as they did last year.[8]
0. “Investors wait for CPI | Kitco News” Kitco NEWS, 13 Feb. 2023, https://www.kitco.com/commentaries/2023-02-13/Investors-wait-for-CPI.html
1. “Stock futures inch higher as investors prepare for latest inflation data: Live updates” CNBC, 14 Feb. 2023, https://www.cnbc.com/2023/02/13/stock-market-today-live-updates.html
2. “Inflation data will test ‘disinflation’ optimism: What to know this week” Yahoo News, 12 Feb. 2023, https://news.yahoo.com/stock-market-week-ahead-consumer-price-index-inflation-retail-sales-172419890.html
3. “What consumers expect on inflation” Axios, 14 Feb. 2023, https://www.axios.com/2023/02/13/consumer-inflation-expectations-fed
4. “Why January’s CPI report could deal a massive blow to the stock market” MarketWatch, 13 Feb. 2023, https://www.marketwatch.com/story/why-januarys-cpi-report-could-deal-a-massive-blow-to-the-stock-market-296cfe28
5. “Markets Brief: January CPI Report Forecasts Show a Bump in the Road to Lower Inflation” Morningstar, 10 Feb. 2023, https://www.morningstar.com/articles/1136947/markets-brief-january-cpi-report-forecasts-show-a-bump-in-the-road-to-lower-inflation
6. “Inflation data to show if prices eased amid hot jobs market” Yahoo! Voices, 14 Feb. 2023, https://www.yahoo.com/gma/inflation-data-show-prices-eased-102614894.html
7. “Stock Market Today: Stocks Close Higher Ahead of CPI” Kiplinger’s Personal Finance, 13 Feb. 2023, https://www.kiplinger.com/investing/stocks/stock-market-today-021323-stocks-close-higher-ahead-of-cpi
8. “Stocks close higher, Dow pops 370 points ahead of Tuesday’s inflation report: Live updates” CNBC, 13 Feb. 2023, https://www.cnbc.com/2023/02/12/stock-market-today-live-updates.html