January Inflation Expected To Fall To 3-Year Low: How Will Markets React?
Portfolio Pulse from Piero Cingari
January's inflation report is expected to show a decline in the annual headline inflation rate to 2.9%, the lowest since February 2021, with core inflation also anticipated to decrease. This could influence the Federal Reserve's interest rate decisions, potentially leading to rate cuts. The market is currently pricing in a 60% likelihood of a rate cut by May and up to 120 basis points of cuts in 2024. The S&P 500 and Nasdaq 100 have shown increases since the start of the year. December's CPI data led to mixed reactions in major US ETFs and stocks.
February 12, 2024 | 5:34 pm
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POSITIVE IMPACT
Netflix Inc. climbed by 2.9% following December 2023's CPI data, potentially benefiting from increased demand for streaming services.
NFLX's rise post-CPI announcement suggests a positive short-term impact, possibly due to perceived resilience or growth in demand for streaming services despite inflationary pressures.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
Invesco QQQ Trust saw a slight increase of 0.2% following December 2023's CPI data, potentially benefiting from tech resilience.
QQQ's increase, albeit modest, after the inflation report suggests a positive short-term outlook, likely due to the resilience or growth potential of tech stocks within its portfolio.
CONFIDENCE 90
IMPORTANCE 60
RELEVANCE 80
NEUTRAL IMPACT
Dow Jones Industrial Average ETF showed no change following December 2023's CPI data, indicating stability amidst market fluctuations.
DIA's lack of movement post-CPI announcement suggests a neutral short-term impact, possibly due to its diversified portfolio balancing out any negative effects from inflation surprises.
CONFIDENCE 90
IMPORTANCE 60
RELEVANCE 80
NEUTRAL IMPACT
SPDR S&P 500 ETF Trust remained unchanged following December 2023's CPI data, indicating resilience amidst inflation surprises.
SPY's stability in the face of December's unexpected inflation rise suggests a neutral short-term impact, as market participants may have already priced in inflation expectations.
CONFIDENCE 90
IMPORTANCE 60
RELEVANCE 80
NEGATIVE IMPACT
iShares Russell 2000 ETF fell by 0.8% following December 2023's CPI data, indicating potential concerns over inflation's impact on small caps.
IWM's decline suggests a negative short-term impact, likely due to concerns over how persistent inflation might affect small-cap companies' costs and profit margins.
CONFIDENCE 90
IMPORTANCE 60
RELEVANCE 80
NEGATIVE IMPACT
Tesla Inc. dropped by 2.9% following December 2023's CPI data, possibly reflecting concerns over inflation's impact on consumer spending and manufacturing costs.
TSLA's significant drop could indicate investor concerns about inflation affecting discretionary consumer spending and increasing manufacturing costs, impacting Tesla's short-term financial outlook.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80