2024: What’s coming out of US Data
Market Overview: December CPI Surpasses Expectations, Dampening Rate Cut Forecasts
In the second week of 2024, after the stock market failed to continue the frenzied trend from the end of 2023 and experienced a decline in the first week of the year, it rebounded during the first four trading days of the following week, effectively recouping the previous week's losses. The$S&P500Index(.SPX.US)$ , which fell 1.52% last week, rose 1.77% this week; the$NasdaqCompositeIndex(.IXIC.US)$, which dropped 3.25% last week, increased by 3.07% this week.
In these first two weeks, market trends continued to hinge on expectations for interest rate cuts. Last Friday, the release of the non-farm employment data, which showed robust job growth, should have dampened expectations for a cut due to a strong labor market. However, a weakening in the services sector index that supports the U.S. economy offset the potential negative impact on these expectations. Furthermore, this Thursday’s release of the December CPI data served as yet another crucial indicator influencing rate cut prospects. Like the strong employment figures, the higher CPI threw cold water on hopes for an imminent rate reduction. Our analytics of Federal Reserve policies indicate that if robust employment is paired with a rebound in inflation, the Fed seems to have no reason to rush into a rate cut.
In the second week of 2024, after the stock market failed to continue the frenzied trend from the end of 2023 and experienced a decline in the first week of the year, it rebounded during the first four trading days of the following week, effectively recouping the previous week's losses. The$S&P500Index(.SPX.US)$ , which fell 1.52% last week, rose 1.77% this week; the$NasdaqCompositeIndex(.IXIC.US)$, which dropped 3.25% last week, increased by 3.07% this week.
In these first two weeks, market trends continued to hinge on expectations for interest rate cuts. Last Friday, the release of the non-farm employment data, which showed robust job growth, should have dampened expectations for a cut due to a strong labor market. However, a weakening in the services sector index that supports the U.S. economy offset the potential negative impact on these expectations. Furthermore, this Thursday’s release of the December CPI data served as yet another crucial indicator influencing rate cut prospects. Like the strong employment figures, the higher CPI threw cold water on hopes for an imminent rate reduction. Our analytics of Federal Reserve policies indicate that if robust employment is paired with a rebound in inflation, the Fed seems to have no reason to rush into a rate cut.
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