Stocks Closed Higher On Friday, And For The Week
Stocks closed higher on Friday and for the week. That made it one week in a row for the Dow, but two weeks in a row for the S&P and Nasdaq.
A lot has happened over the last several weeks: we had the banking scare (which saw the implosion of Silicon Valley Bank, and the backstopping of depositors by the Fed), a better than expected Employment Situation report, two better than expected inflation reports via the Consumer Price Index (CPI) and the Producer Price Index (PPI), and the Fed's 25 basis point rate hike and their signaling that they are near the end of their tightening cycle.
It's been a busy few weeks, packed with lots of drama. But all in all, the markets held up pretty well.
As for the Fed, and what they do next, we'll have to wait until May 3.
In the meantime, we'll get four more inflation reports before then. The first one is the Personal Consumption Expenditures (PCE) index, which comes out this week on Friday, 3/31. Then in April we'll get another CPI report, PPI report, and PCE report.
We'll also get another Employment Situation report in just 2 more weeks. And the usual docket of economic reports throughout the month.
So there will be plenty of data for the Fed to contemplate.
Whether the Fed does one more rate hike or not, it does not seem like they are planning on any more after that given their reiteration of a 5.1% terminal rate for 2023, and then cutting to 4.1% in 2024, and 3.1% in 2025.
Either way, if inflation continues to decline, and the economy remains resilient (strong jobs, strong retail sales, and a strong GDP -- Q1 is forecast at 3.2%), we could very well be at the end of this rate hike cycle.
And that's bullish for stocks.
See you tomorrow,
Executive Vice President, Zacks Investment Research