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This new market week is a big one. We’re starting out slowly, with no major economic news today or tomorrow, and no calendar Q1 earnings reports expected until mid-week, but arguably this week will be more important than last week, which contained all our monthly jobs numbers. Wednesday will bring us new Consumer Price Index (CPI) data for March, followed by the latest Producer Price Index (PPI) print the next morning.
These inflation gauges will be key toward the Fed’s decision on interest rate policy. Not likely at the next Federal Open Market Committee (FOMC) meeting, scheduled for three weeks from tomorrow and ending the following day, but for the June meeting, when the dot plot and most market participants expect the first of three quarter-point rate cuts this year — the first time the Fed will have cut rates since slashing them down to 0.00-0.25% ahead of the Covid pandemic washing upon our shores four years ago.
CPI data for last month is expected to tick down month over month but come up on headline year over year. The Inflation Rate is expected to bump up to +3.5%, while core CPI year over year is anticipated to come down 10 basis points (bps) to +3.7%. Obviously, this is still a ways off the optimum 2% inflation the Fed is shooting for, but compared to the +5.6% reported for March of last year, this particular inflation metric has come down to much more manageable levels.
PPI data has already gone sub-2% on year-over-year headline: +1.6%. Core PPI year over year was +2.8% on last print, so you can see how sticky these inflation measures are when we strip away volatile food and energy costs. But whereas CPI data reflects retail prices, PPI represents the wholesale side, and we have seen a few months over the past year come in sub-1%, including a recent low +0.3% back in June of 2023.
Also on Wednesday morning, the first Q1 reports of earnings season come out. This is typically represented by Delta Air Lines (DAL - Free Report) , and it is again this quarter: the Zacks Rank #2 (Buy)-rated company expects +36% earnings growth year over year on +0.57% higher revenues, coming off strong comps from Q1 a year ago. We’ll also see results from CarMax (KMX - Free Report) and Constellation Brands (STZ - Free Report) on Wednesday, and by Friday morning we’ll have Q1 earnings for the biggest Wall Street banks, including JPMorgan Chase (JPM - Free Report) and Wells Fargo (WFC - Free Report) .
Pre-market futures are up slightly at this hour. The Dow is +40 points an hour ahead of the opening bell, the S&P 500 is +5 and the Nasdaq +22 points. This comes after the blue-chip Dow had clocked its worst week of trading in a year. Considering the high valuations we’d seen in our five-month rally until then, we view this correction as something of a righting of the ship. That is unless we see further precipitous drops, though this is unlikely until at least the major news events begin to filter in mid-week.
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Market Awaits CPI Data Due Wednesday
This new market week is a big one. We’re starting out slowly, with no major economic news today or tomorrow, and no calendar Q1 earnings reports expected until mid-week, but arguably this week will be more important than last week, which contained all our monthly jobs numbers. Wednesday will bring us new Consumer Price Index (CPI) data for March, followed by the latest Producer Price Index (PPI) print the next morning.
These inflation gauges will be key toward the Fed’s decision on interest rate policy. Not likely at the next Federal Open Market Committee (FOMC) meeting, scheduled for three weeks from tomorrow and ending the following day, but for the June meeting, when the dot plot and most market participants expect the first of three quarter-point rate cuts this year — the first time the Fed will have cut rates since slashing them down to 0.00-0.25% ahead of the Covid pandemic washing upon our shores four years ago.
CPI data for last month is expected to tick down month over month but come up on headline year over year. The Inflation Rate is expected to bump up to +3.5%, while core CPI year over year is anticipated to come down 10 basis points (bps) to +3.7%. Obviously, this is still a ways off the optimum 2% inflation the Fed is shooting for, but compared to the +5.6% reported for March of last year, this particular inflation metric has come down to much more manageable levels.
PPI data has already gone sub-2% on year-over-year headline: +1.6%. Core PPI year over year was +2.8% on last print, so you can see how sticky these inflation measures are when we strip away volatile food and energy costs. But whereas CPI data reflects retail prices, PPI represents the wholesale side, and we have seen a few months over the past year come in sub-1%, including a recent low +0.3% back in June of 2023.
Also on Wednesday morning, the first Q1 reports of earnings season come out. This is typically represented by Delta Air Lines (DAL - Free Report) , and it is again this quarter: the Zacks Rank #2 (Buy)-rated company expects +36% earnings growth year over year on +0.57% higher revenues, coming off strong comps from Q1 a year ago. We’ll also see results from CarMax (KMX - Free Report) and Constellation Brands (STZ - Free Report) on Wednesday, and by Friday morning we’ll have Q1 earnings for the biggest Wall Street banks, including JPMorgan Chase (JPM - Free Report) and Wells Fargo (WFC - Free Report) .
Pre-market futures are up slightly at this hour. The Dow is +40 points an hour ahead of the opening bell, the S&P 500 is +5 and the Nasdaq +22 points. This comes after the blue-chip Dow had clocked its worst week of trading in a year. Considering the high valuations we’d seen in our five-month rally until then, we view this correction as something of a righting of the ship. That is unless we see further precipitous drops, though this is unlikely until at least the major news events begin to filter in mid-week.