Stock markets continue to rise Ahead of Key Inflation Report: As Wall Street gears to release crucial inflation data,
the stock market continues to soar, with the S&P 500 setting new all-time highs.
Traders eagerly await the Consumer Price Index (CPI) report to gauge the Federal Reserve’s next steps regarding interest rate cuts.
Meanwhile, other financial markets react with notable movements, including bonds and currencies.
Content
Stock Market Hits Record Levels
Technology Stocks
Federal Reserve’s Dovish Stance
Market Movements
Inflation Moderation
What’s Next for the Bull Market?
Stock market continues to soar and Hits Record Levels
On the brink of the CPI report, the S&P 500 neared 5,800 points, marking its 44th record close in 2024.
Technology stocks again led the charge, with Apple shares climbing 1.7%.
Nvidia paused its five-day rally, while Tesla shares dipped slightly ahead of its highly anticipated Robotaxi launch.
Alphabet, Google’s parent company, dropped 1.5%
following news, the U.S. government is considering breaking up the tech giant in a landmark antitrust case.
Technology Stocks: Buying Opportunity Amid Volatility
Despite recent volatility in major tech stocks, experts see this as a buying opportunity.
Solita Marcelli, Chief Investment Officer for the Americas at UBS Global Wealth Management, stated,
“We remain positive on the tech sector, particularly with the outlook for artificial intelligence.
We believe volatility should be used to build long-term AI exposure.”
Federal Reserve’s Dovish Stance
The release of the Federal Reserve’s latest meeting minutes showed some internal debate over a half-point rate cut,
with some officials favoring a more minor reduction.
Despite this, markets remained largely unaffected.
David Russell from TradeStation remarked,
“The Fed minutes were uneventful, which could be a good sign for stock investors.
Policymakers agree inflation is fading, leaving rate cuts on the table if needed.”
Market Movements Ahead of CPI Report
As stocks surged, the S&P 500 rose by 0.7%, the Nasdaq 100 added 0.8%,
and the Dow Jones Industrial Average climbed by 1%.
In other markets, the U.S. dollar hit its longest winning streak in over two years,
rising 0.4%, U.S. 10-year Treasury yields increased by five basis points to 4.06%.
Inflation Moderation and Economic Outlook
The upcoming CPI report is expected to show a 0.1% increase in consumer prices for September,
the smallest gain in three months.
Over the past year, CPI likely rose by 2.3%, marking six consecutive months of slowing inflation.
Core inflation, which excludes food and energy,
is expected to increase by 0.2% for the month and 3.2% compared to September 2023.
Matthew Weller from Forex.com commented, “With the Fed shifting focus from inflation to the labor market,
tomorrow’s CPI report may cause less market movement than expected,
though volatility is still possible following the strong jobs report.”
Investors’ Expectations and Economic Optimism
A recent survey from 22V Research revealed mixed investor sentiment about the market’s reaction to the CPI report.
While 42% of investors expect a minimal or mixed response, 32% predict a risk-off approach,
and 25% anticipate a risk-on reaction.
Dennis DeBusschere, founder of 22V, noted growing optimism about inflation,
adding that fewer investors expect a recession,
though concerns about tightening financial conditions remain.
What’s Next for the Bull Market?
According to Ed Clissold of Ned Davis Research,
inflation must keep moderating for the stock market rally to continue,
the economy must land softly, and corporate earnings must stay robust.
As the bull market approaches its second anniversary,
broader market participation could fuel the next phase of stock gains,
particularly as large-cap and growth stocks outperform small-cap and value shares.
Bill Gross’ Forecast: Lower, But Positive Returns
Bill Gross is a billionaire investor and co-founder of Pacific Investment Management Co.
predicts that investors can still expect low but positive returns while the market rally is slowing.
He recommends maintaining average stock exposure, focusing on defensive stocks,
and holding a small bond position.
Gross said, “No bear market, but it’s not the same bull market anymore.”
Summary of Market Movements
Stocks: The S&P 500 rose 0.7%, the Nasdaq 100 added 0.8%,
and the Dow Jones Industrial Average climbed 1%.
Currencies: The Bloomberg Dollar Spot Index gained 0.4%,
the euro fell 0.4% to $1.0939, and the Japanese yen weakened by 0.8% to 149.32 per dollar.
Cryptocurrencies: Bitcoin fell 2.2% to $60,966,
while Ether dropped 1.1% to $2,415. –
Commodities: West Texas Intermediate crude slipped 0.2% to $73.44 per barrel,
and spot gold declined 0.5% to $2,609.26 an ounce.
Stock markets continue to rise Ahead of Key Inflation Report