What Has the Dow Done After Past CPI Releases
What Has the Dow Done After Past CPI Releases?
What Has the Dow Done After Past CPI Releases
The Dow has not done terribly well on CPI days, according to research from Bespoke Investment Group. The index has fallen on five of the six reports since October, and the worst month was December’s loss.
Headline CPI slipped in January, but the core CPI, which excludes food and energy prices, climbed 0.4%, exceeding expectations. That was a sign that inflation is still rising, even though it’s moderated since September and the Fed has raised interest rates four times in the past year.
What to Watch Next: Retail Sales and Industrial Production
The markets got a boost Monday from stronger-than-expected employment data, and Wednesday will feature retail sales and industrial production. Inflation worries will continue to loom, with the consumer price index and producer price index releases coming on Thursday.
Economists expect flat consumer prices and a moderate rise in the core CPI excluding energy and food costs, which have been driving much of the market turmoil. That should temper concerns over accelerating inflation.
What Has the Dow Done After Past CPI Reports
Stock indices finished Monday lower but are still up for the year, with the S&P 500 and Nasdaq closing higher. That isn’t a sign that the market is about to turn in a bearish direction, however, especially with the Federal Reserve set to hike interest rates again in November.
It’s a good idea to be cautious of stocks that are exhibiting buy signals, especially when the market is concerned about inflation. Those stocks could be hit hard tomorrow, particularly if the consumer price index comes in higher than expected.
Inflation battle continues to rage, with markets struggling to find balance between a Fed that is trying to cool the economy and stubborn inflation. The 2-year Treasury yield jumped to 4.8%, while the dollar rose and shares of technology companies dropped.
Bespoke’s research also showed that the Dow hasn’t done too well on CPI days after the core CPI, which excludes food prices, comes out higher than expectations. On average, the Dow has lost 0.32% on these reports over the past two years.
What Has the Dow Done When Inflation Is High?
The S&P 500 fell 0.76% after the consumer price index came out slightly higher than expected. That was a big change from last month, when the index was up 3.7% after the same report.
This is the biggest gain for the year and a sign that inflation may be moving into a more balanced state. But it also means that the Fed will have to continue to raise interest rates.
The CPI is also important for consumer spending, and the earnings of companies that sell goods and services will be impacted by these changes. So, companies that benefit from consumer spending like beverage behemoth Coca-Cola (NYSE:KO) and travel platform Airbnb (NASDAQ:ABNB) will have a better chance of outperforming when the numbers come in.
