The Federal Reserve is closely monitoring inflation data as it prepares to meet next month and likely raise interest rates by another quarter of a percentage point.[0] Markets expect that the Fed will raise rates twice more this summer, pushing the benchmark rate to above 5% before peaking in July.[0]
The Producer Price Index (PPI) and Consumer Price Index (CPI) will be released at 8:30 ET and 8:30 ET respectively. The PPI is expected to rise 0.4% for the month and 5.4% for the year, while the CPI is expected to rise 0.5% for the month and 6.2% for the year.[1]
The Commerce Department’s Retail Sales for January will be published at 8:30 ET.[0] An increase of 1.7 percent is the consensus, as opposed to the 1.1 percent decline in December.[2]
On Monday, stocks rose on expectations of the CPI release, with the Dow Jones Industrial Average up 20 points, the S&P 500 down 4.95 points and the Nasdaq 100 up 15 points.[1]
The latest inflation read came in a little hotter than expected.[3] The consumer price index for January increased by 0.5% from the previous month and was 6.4% higher than the same period of the year prior[4] Economists estimated that the Consumer Price Index (CPI) rose by 0.4% in January, leading to an annual increase of 6.2%.[3] Core CPI, which excludes energy and food, rose 0.4% and 6.2%, respectively, also exceeding expectations.[1]
The higher-than-expected inflation read may have spooked investors into thinking the Fed will keep up its aggressive campaign against price increases.[3] This could lead to further rate hikes, so investors will be watching the CPI and PPI data closely.
0. “Retail sales, Cisco earnings, Shopify results: 3 things to watch By Investing.com” Investing.com Canada, 14 Feb. 2023, https://ca.investing.com/news/stock-market-news/retail-sales-cisco-earnings-shopify-results-3-things-to-watch-2902781
1. “Producer prices, Applied Materials, Constellation Energy: 3 things to watch By Investing.com” Investing.com, 15 Feb. 2023, https://www.investing.com/news/stock-market-news/producer-prices-applied-materials-constellation-energy-3-things-to-watch-3004590
2. “Wall Street Might Open Broadly In Negative Territory” RTTNews, 15 Feb. 2023, https://www.rttnews.com/3344275/wall-street-might-open-broadly-in-negative-territory.aspx
3. “5 things to know before the stock market opens Tuesday” CNBC, 14 Feb. 2023, https://www.cnbc.com/2023/02/14/5-things-to-know-before-the-stock-market-opens-tuesday-february-14.html
4. “The Club’s top 10 things Tuesday: CPI, volatile market, oil dips” CNBC, 14 Feb. 2023, https://www.cnbc.com/2023/02/14/the-clubs-top-10-things-tuesday-cpi-volatile-market-oil-dips.html