Wall Street ends up, record for the S&P 500 index
March 28, 2024
If Fed Decides Not To Cut In June, They Could Cut By 50 Bps In Sept & 25 Bps In Nov: Spartan Cap
April 1, 2024Sentiment:
Mostly Positive
28 Mar 2024 02:04:28 PM
- Major U.S. stock indexes little changed
- Energy leads S&P 500 sector gainers; Tech weakest group
- Dollar ~flat; gold gains >1%; crude advances ~2%; bitcoin up >2%
- U.S. 10-Year Treasury yield ~flat at ~4.20%
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WHAT IF THE PCE PRICE INDEX COMES IN HOT?
Many people are taking tomorrow off to observe Good Friday.
The good folks at the Commerce Department are not among them; they’re planning on releasing their hotly anticipated Personal Consumption Expenditures (PCE) report anyway, market holiday or not.
The PCE price index, of course, is Powell & Co’s pet inflation yardstick. And market participants will be watching it closely, even if they’ll have to stew over the data until Monday before they can on it.
Economists polled by Reuters expect the headline price index to heat up to 0.4% from 0.3% on a monthly basis and to 2.5% from 2.4% year-over-year.
Better behavior is expected from core PCE, which strips out volatile food and energy prices. It’s expected to cool down to 0.3% month-over-month and hold steady at 2.8% on an annual basis.
What if the numbers come in hotter than expected?
“The path to three rate cuts would be cut to maybe one if (inflation numbers) come in much stronger than expected, and the markets would react negatively,” said Peter Cardillo, chief market economist at Spartan Capital Securities, in an interview.
“But the stock market is so strong, it wouldn’t cause a correction,” Cardillo added. “And the reason is that ten days from tomorrow we’ll be approaching earnings season again.”
Cardillo offers a reminder that Powell & Co is looking at other data as well.
“If you look at today’s data, GDP was revised upward and so was (consumer) spending,” he said. “If the consumer remains strong, and if inflation continues to stay elevated, then it’s going to be very difficult for Powell to pull the trigger in June.”
Here’s a look at major inflation indicators and there they sit relative to the Fed’s oft-stated 2% annual target:
(Stephen Culp)
