Stocks Down On Inflation News, Focus Will Shift To Earnings
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Stocks finished down yesterday, and are now slightly lower for the week, with one more day to go.
The markets were up earlier in the day, but turned south shortly thereafter.
Another high inflation reading, this time from the Producer Price Index, which showed prices up 9.7% y/y, was the highest on record dating back to 2010.
That comes on the heels of Wednesday's Consumer Price Index, which was up 7.0% (a near 40-year high).
The Fed has already begun their QE tapering, and expects to fully unwind their bond purchases in March. After that, they've signaled they're ready to begin hiking rates. And the market is largely expecting 3 rate hikes.
In other news, Weekly Jobless Claims rose by 23,000 to 230K, well above last week's 207K and views for 205K. The smoother 4-week moving average came in at 210.75K, up from last week's 204.50K.
Today we'll get another look at the economy with the Retail Sales report, Import and Export Prices, Business Inventories, Industrial Production, and Consumer Sentiment.
While inflation continues to be a concern, strong economic growth has been fueling stocks (yesterday notwithstanding).
And with earnings season now underway, we'll see if corporate profits can make another new record high.
Between today's economic reports, and earnings, a little bit of good news could put stocks back in positive territory for the week.
Best,
Kevin Matras
Executive Vice President, Zacks Investment Research
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