Stocks certainly weren't very confident coming out of the gate for 2024, but the first full trading week of the new year could be the week that sets the tone for the markets for next year.
After all, the question of whether inflation has been tamed — or whether it will remain under control — remains a crucial issue when it comes to determining whether, when and by how much the Fed will cut interest rates in 2024.
be seen: Why stock market investors will remain at the mercy of changing interest rate cut expectations after a shaky start through 2024
So the release of this week's December CPI on Thursday, followed by this month's Producer Price Index on Friday, holds the potential for market-moving fireworks.
paying off: Financial markets may be ignoring the “residual ember” that could reignite inflation
The consumer price index is expected to rise 0.2% in December, according to economists polled by The Wall Street Journal, and the closely watched core rate that excludes food and energy is expected to rise by the same amount. This would not be a huge jump, but it would see the headline year-on-year figure rise to 3.3%, from 3.1% in November, and halt some of the recent progress on inflation. However, the base rate could slow year-on-year to 3.8% from 4%.
Next week's inflation readings and other events will also provide a window into the strength of the US consumer and the potential for a “soft landing” for the economy. This is key to the “Goldilocks” backdrop that helped drive nine straight weekly gains for the stock market, which ended as the calendar flipped to 2024.
is reading: Inflation is back in the spotlight this week with the appearance of the Consumer Price Index (CPI) and Producer Price Index (PPI).
“Looking ahead to the week ahead, consumer strength is a top priority as we receive important economic information on this topic, particularly the CPI, PPI, banking and consumer credit,” said Mark Hackett, head of investment research at Nationwide. Monday note. “This should help us better understand market and earnings expectations for the first quarter.”
Earnings season gets its unofficial kickoff on Friday with JPMorgan Chase & Co.'s results.
and Delta Airlines DAL,
That was followed next week by a slew of major Wall Street banks.
As MarketWatch's Bill Peters reported, many analysts expect companies to use fourth-quarter results as an opportunity to sound a cautious note about next year.
“Bottom-up estimates for the S&P 500's year-over-year earnings growth rate in the fourth quarter fell from 9.2% at the end of September to 0.9% where they are now. Such a lower bound makes earnings surprises easier to come by,” strategists at Glenmede said in a note. “They are, but they may be less impressive or important to investors.”
Last year's stock market rally, which saw the S&P 500 SPX jump more than 24% to near its record close as of January 2022, was led by massive technology stocks, with gains fueled by a bout of euphoria over the crisis. Prospects of artificial intelligence. Chip maker Nvidia Corp. NVDA,
It is up nearly 240% in 2023 as it leads the so-called “Big Seven” of massive technology groups that are set to benefit the most from the AI revolution.
The artificial intelligence revolution is also putting the Consumer Electronics Show, or CES, which kicks off in Las Vegas on Tuesday, in the spotlight.
Once a fun event focused on unveiling the latest devices, the trade show is now seen as a representation of how technology is seeping into every corner of modern life, Nicholas Colas, founder of DataTrek Research, said in a note Monday.
“Big topics at CES 2024 will be artificial intelligence, mobility, and healthcare. How companies integrate AI into new products will be particularly important for investor sentiment toward technology stocks,” he wrote.
And don't forget encryption. After a great run in 2023, Bitcoin (BTCUSD) saw…
To undo the criminal conviction of FTX founder Sam Bankman Fried, as well as the $4.3 billion fine and plea deal involving Zhao Changpeng “CZ,” co-founder of the world’s largest cryptocurrency exchange Binance, all eyes are on the Securities and Exchange Commission this week.
The agency must decide by Wednesday whether to approve applications for a bitcoin spot currency ETF — an approval that is widely expected.
Encryption: Bitcoin ETF – Here are the 10 funds scheduled to debut following the SEC decision
“For starters, trillions of dollars in institutional and pension assets can only be invested in regulated financial assets, a situation that has hindered the adoption of Bitcoin as an investable asset in the world’s richest economy,” said Matthew Wheeler, head of global research at Bitcoin Bank. Forex.com and the city index, in a note.
“Critically, unlike previous high-profile, derivative Bitcoin product launches, such as futures or futures-based ETFs, spot ETFs will be required to purchase and hold the underlying Bitcoin equivalent to their underlying assets, radically changing In the equilibrium of supply and demand in Bitcoin,” Wheeler wrote.
So it's no surprise that there's been a lot of interest in the decision with Bitcoin trading just above $47,000 — up more than 12% in the new year and nearly 180% over the past 12 months, but still well below its recent high. Launching above $65,000 in November. 2021.
