Consumer Sentiment Hits 31-Month High In February, Inflation Expectations Edge Higher
Portfolio Pulse from Piero Cingari
Consumer sentiment in the U.S. reached a 31-month high in February 2024, according to the University of Michigan's Consumer Sentiment Index, which rose to 79.6. This marks the third consecutive monthly increase, showcasing consumer resilience despite high interest rates. However, inflation expectations for the year ahead have slightly increased, exceeding the Federal Reserve's 2% target. U.S. stocks declined following a higher-than-expected Producer Price Index (PPI) report, with SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ) experiencing drops.
February 16, 2024 | 3:35 pm
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NEGATIVE IMPACT
Invesco QQQ Trust (QQQ) underperformed, dropping 0.8% amid concerns over delayed interest rate cuts following a higher-than-expected PPI report.
QQQ's larger drop compared to SPY is likely due to its tech-heavy composition, which is more sensitive to interest rate expectations. The unexpected rise in PPI has led to concerns over the Federal Reserve's monetary policy, impacting tech stocks and, by extension, QQQ.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
SPDR S&P 500 ETF Trust (SPY) fell 0.3% following a higher-than-expected PPI report, indicating investor concerns over prolonged high interest rates.
The decline in SPY's price can be attributed to the higher-than-expected PPI report, which has led investors to anticipate a delay in interest rate cuts by the Federal Reserve. This anticipation negatively impacts investor sentiment towards equities, particularly those tracked by the SPY.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90