Market retreats on inflation, economic reports

By: Gerry Sparrow

Stocks Snap Winning Streak

Markets were quiet Monday but opened lower Tuesday in response to the January inflation report that showed higher-than-expected consumer prices. But stocks regained some momentum on Wednesday and rallied Thursday despite disappointing reports on both retail sales and industrial production for January.^1,2

News of higher-than-expected wholesale prices on Friday put investors back on edge and kept stocks from ending the week on a positive note. The weekly loss broke a five-week winning streak.³

Inflated Perspective

Consumer Price Index data was one of the big pieces of news driving markets last week, with January’s numbers coming in at 3.1 percent compared to a year prior—cooler than December’s 3.4 percent year-over-year gain but warmer than the 2.9 percent consensus. Jittery Investors focused on the hotter-than-expected part.⁴

With the consumer report closely followed by disappointing inflation news on the producer level, attention quickly shifted to the Fed and what’s next for interest rates. While the Fed has indicated short-term rates may trend lower in 2024, the January inflation reports support Fed Chair Powell’s recent comments that the Fed is in no hurry to cut rates.⁴

PHOTO CREDIT https://www.shutterstock.com/g/lightspring

Via SHUTTERSTOCK

Footnotes and Sources

^{1. The Wall Street Journal, February 13, 2024.}

^{2. CNBC, February 16, 2024.}

^{3. The Wall Street Journal, February 15, 2024.}

^{4. The Wall Street Journal, February 13, 2024.}

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