Wall Street Gave Ahead – Live Trading News

Last week, stocks closed on a high as investor optimism about the rate cut was boosted by lower-than-expected inflation numbers.

While the S&P 500 (^GSPC) rose almost 1.5%, the Nasdaq Composite (^IXIC) rose more than 3%. For the first time in history, the S&P 500 ended the week above 5,400. For four straight days, the Nasdaq and S&P 500 both closed at record highs. In the meantime, the Dow Jones Industrial Average (^DJI) fell more than 0.7%.

The economic calendar will be dominated by the May retail sales report, and investors can expect a relatively quiet week. No significant company news is expected. The focus will also be on weekly unemployment claims and updates on activity in the manufacturing and services sectors.

The markets are closed on Wednesdays for the Juneteenth holiday.

Inflation is returning to the right trajectory.

The “core” consumer price index (CPI), which excludes volatile food and energy categories, rose 0.2% month-on-month in May, the lowest since June 2023. In May, the “core” producer price index (PPI) remained on level. unchanged from the previous month, which was below the 0.3% increase that economists had expected.

Economists say this suggests the Federal Reserve’s preferred inflation barometer within the Personal Consumption Expenditures (PCE) index will be favorable later this month.

Bank of America Stephen Juneau, a US economist, said Thursday’s PPI “reaffirms his belief that disinflation is the most likely course of action” and anticipates an “A+ report” for May’s core PCE. BofA expects core PCE to rise 0.16% month-on-month in May.

“The May CPI and PPI data support our view that the Fed will cut its policy rate later this year,” Juneau reported. “We believe that recent inflation data significantly reduces the likelihood that the Fed will have to raise rates and view labor market data as indications that the likelihood of rapid rate cuts is also low.”

According to him, “an easing cycle starting in September remains a possibility, especially if shelter inflation were to decline further in the coming months.”
The Federal Reserve expects only one interest rate cut this year, despite declining inflation and slowing economic development. A growing number of Wall Street economists are concerned that the central bank could overstep its authority with its most restrictive interest rate policy in more than two decades.

These economists are concerned that the economy is already showing signs of weakening, such as a rise in unemployment, and that these signs could quickly worsen if the Federal Reserve maintains high interest rates for an extended period of time. This is why investors will be closely watching the first weekly jobless claims release on Thursday morning. The latest release last week marked the highest number of weekly jobless claims in ten months, unexpectedly reaching 242,000.

Mohamed El-Erian, Allianz’s chief economic adviser, told Yahoo Finance that the Federal Reserve’s risk-benefit analysis suggests that postponing a rate cut in December would result in a slowdown that is “too late.”

In a letter to clients, Renaissance Macro economics chief Neil Dutta said there is ample evidence to suggest further disinflation is imminent. Dutta argues that this will necessitate a change in Federal Reserve rhetoric. Dutta argues that the Fed’s current stance poses a risk.

“Ultimately, unemployment rose and core inflation fell,” Dutta concluded. “The policy implications of this are clear.” It’s time to move on and ensure a successful outcome.
There is momentum in the bull market.
The current stock market rally could be further strengthened by the latest inflation data, which follows a challenging start to 2024.

Julian Emanuel, head of Evercore ISI’s equity, derivatives and quantitative strategy, said in a note to clients that the decline in inflation remains one of the key factors contributing to the stock market bull market.

Last week, the S&P 500 (^GSPC) and Nasdaq (^IXIC) achieved four consecutive record closes as investors assessed lower-than-expected inflation rates for both consumer and wholesale prices. Despite Federal Reserve officials’ median forecast favoring one cut in the June 12 Summary of Economic Projections (SEP), the paper helped markets maintain their optimism about two rate cuts this year.

Jonathan Golub, the chief U.S. equity strategist at UBS Investment Bank, maintains one of the highest final targets for the S&P 500 on Wall Street at 5,600. He believes the inflation data released this week, and the possible implications for future rate cuts, “offer the potential for even greater upside” to his year-end outlook.

Weekly calendar


Economic data: Empire production, June (-13 expected, -15.6 earlier)

Income: Lennar (LEN)


Economic data: Retail sales, month-on-month, May (+0.3% expected, 0% prior); Retail sales excluding cars and gasoline, May (+0.3% expected, -0.1% earlier); Industrial production month-on-month, May (0.4% expected, 0% earlier)

Income: KB Home (KBH)


Economic data: NAHB housing market index, June (45 expected, 45 previously); MBA mortgage applications, week ending June 14 (+15.6%)

Income: The markets are closed for the June bank holiday.


Economic data: Initial unemployment claims, week ending June 15 (previously 242,000); Housing starts month-on-month, May (+1.1% expected, +5.7% earlier); Construction permits month-on-month, May (+1.4% expected, -3% earlier); Philadelphia Business Outlook, June (4.5 expected, 4.5 earlier); Import prices, month-on-month, April (+0.2% expected, +0.4% earlier)

Income: Accenture (ACN), Kroger (KR)


Economic data: Leading index, May (-0.3% expected, -0.6% earlier); S&P Global US manufacturing PMI, preliminary June (51 expected, 51.3 previously); S&P Global US services PMI, preliminary June (53.4 expected, 54.8 previously); S&P Global US composite PMI, provisional June (54.5 previously)

Income: CarMax (KMX), FactSet (FDS)

Shayne Heffernan