CPI Inflation Data in Focus This Week

Week in Review

Despite its limitations in representing the broader market, the Dow Jones Industrial Average remains a popular and ingrained index in the world of finance. With advancements in technology, individuals now have access to tracking a larger and more representative group of stocks at any given time. However, the 128-year-old index continues to hold a significant presence in market culture.

Currently, the Dow is experiencing a notable period of success, with a record breaking eight consecutive gains and a 4.5% increase over the past week. This growth has surpassed the broader S&P 500 index by nearly one percentage point.

As the Dow approaches the 40,000 mark once again, there may be turbulent times ahead. The upcoming release of the Consumer Price Index will be a crucial test for the markets. Given the recurring concerns about high inflation readings throughout the year, investor confidence may be shaken once again. If the data comes in hotter than expected it could further reduce 2024 rate cut expectations.

Forecasts are that the Consumer Price Index (CPI) will have increased by 0.3% in April. Unfortunately, recent patterns suggest that this may not be the case. Inflation has consistently been higher than expected this year, which has led to a decrease in expectations for possible rate cuts by the Federal Reserve. This was not the case just a few months ago, when it was predicted that there would be seven cuts in the year. However, the current prediction is much lower, with only two or possibly even fewer cuts anticipated.

Economic & Earnings Calendar

The upcoming week's spotlight will be on the latest inflation numbers and a new wave of first-quarter earnings reports. Additional economic indicators, including retail sales data, housing statistics, and sentiment surveys, will also be released throughout the week.

On Wednesday, the Bureau of Labor Statistics will unveil the April consumer price index, with analysts predicting a 3.4% year-over-year increase, a slight decrease from March's figures. The core CPI, which excludes food and energy prices, is projected to rise by 3.6%, down from the previous month's 3.8% increase. The producer price index for April will also be announced by the BLS on Tuesday.

Other noteworthy economic data to look out for includes the Federal Reserve Bank of New York's Survey of Consumer Expectations for April on Monday and the National Federation of Independent Business' Small Business Optimism Index for April on Tuesday.

On Wednesday, the Census Bureau will publish its retail sales figures for April. Additionally, Friday will see the release of the Conference Board's Leading Economic Index for April. The upcoming week's earnings calendar will feature notable reports from major companies such as Alibaba Group Holding and Home Depot on Tuesday, Cisco Systems on Wednesday, and Applied Materials, Deere, and Walmart on Thursday. Investors will be eagerly awaiting these results for insights into the overall health of the economy and the performance of these individual businesses.

Chart of the Week: We are bullish on copper prices here.

Disclaimer: The author of this blog is a financial advisor but may not be the right advisor for you. In fact, the author may not even be the right advisor for themselves. Please consult a qualified professional before making any financial decisions based on the content of this blog. And remember, just because the author has a fancy title and a briefcase full of spreadsheets, doesn't mean they know what they're doing.