The week of soft, hard or no landing?
The U.S. stocks rally fueled by hopes for a soft landing seem to take a detour this week.? The most recent economic data releases indicate the road to lower inflation might be bumpier and longer than previously anticipated. The S&P 500 posted a mild loss of 0.17% this week while the Russell 2000 gained 1.5% and with most of the gains coming during the day trading session.?
Monday - Following an exciting Superbowl, stocks rallied to start the week into Tuesday’s CPI print.? Stocks opened higher and continued to climb during the day with both the S&P 500 and Russell 2000 gaining about 1.2%.? The “no landing” scenario seemed to be taking hold in spite of Powell’s comment last week that rates may be higher for longer.?
Tuesday - This was an extremely volatile day following the CPI data that showed that although annual inflation cooled for the seventh straight month to 6.4% in January,? it was not cooling as fast as expected. Core prices (less food and energy) were up 5.6% over 12 months, which is still high. The Fed has more work to do in bringing inflation down to its 2% goal. With the data pointing to the need for further rate increases in the following months, both Small Cap and Large Cap indexes lost 5 bps.?
Wednesday - Stocks wavered after a fairly strong rebound in retail sales, up 3% in January - a sign of economic strength. Additionally, the Empire State Manufacturing Index came in much higher than expected. The initial market reaction was lower (as it has been quite a lot lately) but the S&P 500 finished up 0.3% after staying in the red territory most of the day.?
?
领英推荐
Thursday - Stocks opened lower after strong Supplier-Level Inflation data and better than expected jobs data. Investors’ hopes for a faster disinflation and a less aggressive Fed policy are fading. Early in the year it seemed there was good progress in the fight against inflation that fueled the market rally.? The data however tells a different story and the U.S. economy remains stronger than expected despite the Fed hikes. Stocks recovered intraday from a steep early morning sell-off only to sell off powerfully at the close.? The S&P was down 1.38%? and the Russell 0.95%.
?
Friday - Markets were down strongly in the early morning and then recovered later in the day to close with mixed results as investors continued to digest the hotter than expected economic data and hawkish Fed tone. The S&P 500 fell 0.3% and the Russell 2000 was up 0.2%.?
Next Week? - There are a number of Fed officials talking next week and there will be lots of discussion about various landing scenarios and a possible 50 basis point hike at the next Fed meeting.? As we are mostly through earnings season, the market will be looking for a catalyst in one direction or the other.