PCE Ahead.
Robert R. Fragnito
Chief Operating Officer | Financial Advisor | Portfolio Manager at MCF Capital Management, LLC
U.S. stocks finished lower Wednesday as investors digested GDP revisions while awaiting the Fed's favorite inflation gauge due Thursday.
On Wednesday,?stocks?mostly?traded lower after?fourth-quarter U.S. economic growth (GDP)?was revised slightly to an annualized rate of 3.2% from 3.3%. Meanwhile, subtle anxiety over Thursday's release of the?PCE price index?weighed during the session.
Elsewhere on the economic data front, the Commerce Department reported Wednesday that the January preliminary read on the?U.S. trade deficit?in goods widened by 2.6% to $90.2 billion.??
U.S. Treasury yields?retreated on economic updates showing slightly weaker growth for the U.S. economy. The closely followed?10-year yield?fell 4.1 basis points, ending the session at 4.273%.?
Investors also digested comments from several?Federal Reserve officials?who maintained caution over the scale and timing of interest rate cuts. New York Fed President?John Williams?said Wednesday that the central bank will likely cut rates later this year.?
Oil futures?moved lower Wednesday as U.S. government data showed a fifth-straight weekly increase in domestic commercial crude inventories. Meanwhile,?Reuters?reported that?OPEC+?members may extend voluntary production cuts into the second quarter.??
WTI crude oil, the U.S. benchmark, fell 0.4% to settle at $78.54 a barrel on NYMEX.?
Bitcoin?reached around $64,000 during the trading day, a level not witnessed in over two years. The cryptocurrency drifted into the low $60,000s heading into the New York close.??
The?U.S. dollar?advanced against a basket of currencies ahead of Thursday's U.S. and European inflation data.?
COMEX gold?settled 0.07% lower at $2,033.00 an ounce on U.S. economic data as rate cut expectations for May diminished after consumer spending data in the fourth quarter was stronger than expected.?
Finally,?Asian markets?continued?retreating overnight as the Shanghai Composite and Hong Kong's Hang Seng fell roughly 1.5%, while Japan's Nikkei declined slightly following a record close on Tuesday.?
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Looking Ahead
Tomorrow?is only a day away, and Thursday's release of the Fed's favorite inflation gauge will be in focus.?
Economists expect the?PCE price index?to show that inflation remained sticky in January. Estimates reflect a month-over-month increase of?0.3%?on the headline figure, with the core read (ex. food and energy costs) rising?0.4%.??
Investors are attaching significant importance to Thursday's PCE numbers as they remain?data-dependent?this week. Their dependency stems from the need to forecast how the Federal Reserve will move forward on interest rate cuts this year.?
Moreover, clarity on whether a?market correction?will materialize near term continues to weigh. We must remember that stocks have had an impressive run in the past year.?
We remain?positive?on markets in the long term as we review overstretched positions to align with our model allocations while assessing entry points for new purchases.?
Stay Tuned!?
OUR FIRM
MCF Capital Management, LLC is an independent, family-run, financial advisory firm that manages investment portfolios for individuals and businesses through Quantitative Market Data Analysis.
THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INVESTMENT ADVICE.?
???SOURCES:?LSEG Workspace, Dow Jones NewsPlus, MarketWatch, Wall Street Journal, Barron’s, FinancialJuice, Investing .com, CNBC, Reuters, Wells Fargo Investment Institute, TradingView, Zacks