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Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research

Stocks Closed Higher Again Yesterday, All Eyes On This Morning's PCE Inflation Report

Stocks closed higher again yesterday ahead of this morning's inflation report. And the major indexes are poised to close higher for the week, which would make it 2 weeks in a row for the Dow, and 3 weeks in a row for the S&P and Nasdaq.

All eyes will be on this morning's Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge.

The recent Consumer Price Index (CPI) and Producer Price Index (PP) reports earlier this month, all showed larger than expected declines in inflation, and sizable declines from last year's summer highs. Another better than expected inflation reading would be bullish for both the economy and the market. And potentially signal to the Fed that inflation continues to ease, and that maybe they can end their rate hike cycle sooner rather than later.

As it stands now, based on their recent comments, they are only expected to raise one more time for another 25 basis points at the conclusion of their next FOMC meeting on May 3.

Granted, there will be 3 more inflation reports after this one before the next meeting, as we'll get another CPI, PPI and PCE report in April. But the more data points that come out between now and then that show inflation easing, the more ammo the Fed has to call it quits.

This morning's PCE report comes out at 8:30 AM ET.

In other news, Weekly Jobless Claims rose by 7,000 new claims last week to 198K vs. views for 195K.

Corporate Profits (after tax) slipped to -1.4% y/y for Q4'22 vs. the prior reading of 2.3%. Accounting for Inventory and Consumption Adjustments, it was up 1.6% vs. the prior pace of 3.5%.

And the final estimate for Q4 GDP came in at 2.6%. Just under the previous estimate for 2.7%. But a solid gain to end last year given the unofficial recession we saw in the first-half of last year. Interestingly, the Personal Consumption Expenditures in Q4 came in at 1.0% y/y vs. the consensus for 1.4%. (Could that be a bit of foreshadowing for this morning's report? We will soon find out.)

In addition to the inflation report this morning, we'll also get the Chicago PMI, and the Consumer Sentiment report as well.

But again, the main event will be the PCE index.

Could be a busy day.


Kevin Matras

Executive Vice President, Zacks Investment Research


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