Next week’s inflation data could undermine market expectations ahead of the Federal Reserve’s meeting later this month, which appears to be pricing in perfection. FactSet predicts that the November consumer price index released on Wednesday is expected to increase by 0.2% month-on-month and 2.6% year-on-year. If so, it would mean no change from last month, but would also show inflation’s stubbornness. A surprisingly hot report could dampen hopes for a rate cut from the Federal Reserve in December. After the release of new U.S. employment data on Friday, CME Group’s FedWatch tool showed an 87% chance of a rate cut this month. Strong inflation data will also hamper recent gains in stocks. The rally shows no signs of slowing down, but it’s also expensive, prompting investors to look for opportunities that could go wrong. “The Consumer Price Index (CPI) impacted the market throughout 2023 and the first half of 2024, and there’s a chance it will happen again,” said Jay Woods, chief global strategist at Freedom Capital Markets. “I think because of the CPI numbers , we’re not going to see a big jump on this rally, but given the way we’ve been going, it does have the potential to get us back a couple percentage points — 2%, 3%, of the S&P 500, Oppenheimer said. The price-to-earnings ratio has risen to 26, 32% above the average price-to-earnings ratio since 1989, but that doesn’t mean investors expect any pullback to last long, even though the calendar is set for the end of this year. There are still many hurdles to overcome – including the Federal Open Market Committee (FOMC) meeting – but with strong fundamentals and investor optimism, observers expect stocks to likely recoup all their losses and continue to rise towards the end of the year. “Once we get through these events, investors can actually invest in Christmas, Santa Claus gatherings, etc., so I think 6,300 is still very doable,” Tom Lee, director of research at Advisors, told CNBC. Buy the dip. Similarly, Freedom Capital’s Woods expects the S&P 500 to end the year at around 6,220, even if the rally between now and Dec. 31 takes a bit of a “cold water” hit. The gains helped the S&P 500 and Nasdaq gain about 1% and 3.3%, respectively. The Dow Jones Industrial Average was the only benchmark to post a weekly decline, falling 0.6%. Market excitement rose this week in part as Salesforce beat expectations and showed strong promise for the company’s artificial intelligence products, leading to unexpected gains for big tech stocks. Renewed interest in technology deals, which some expected to be over, has boosted confidence as money continues to flow between industries. The Technology Select Sector SPDR Fund (XLK) hit its first all-time high since July this week, rising 3%. “We’ve seen rotations between industries, and now we’re seeing rotations within industries,” Woods said. To me, this is very fascinating because the money is not leaving the market. Funds are still in the market. The high part rebounded and some investors were worried that the market was too frothy. For example, Bitcoin exceeded $100,000 this week, and some projects may exceed $200,000 within a year. It rose 7.8% on the week. 48.3%. field. “I think in 2025 we’re going to start to get a little bit excited,” Woods said. One week ahead calendar all times are Eastern Time. Wholesale Inventory Final (October) Earnings: Oracle Tuesday, December 10 8:30 AM Unit Labor Cost Final (Q3) 8:30 AM Productivity Final (Q3) Earnings: AutoZone Wednesday, December 11 8:30 AM Consumer Price Index (November) 8:30 AM Hourly Earnings (November) 8:30 AM Average Work Week Final (November) Earnings: Adobe Thursday, December 12 AM 8:30 Continuing jobless claims (11/30) 8:30 Initial jobless claims (12/07) 8:30 Producer Price Index (November) Profit: Broadcom, Costco Wholesale December 13 Friday 8:30 AM Export Price Index (November) 8:30 AM Import Price Index (November)
