US equities unwavering amid sticky inflation print

2024-01-12
Summary:

US stocks closed flat. Thursday as higher-than-expected inflation tempered early 2024 Fed rate cut hopes, but lower Treasury yields limited declines.

US stocks closed little changed on Thursday as news of hotter-than-expected inflation dampened hopes for early interest rate cuts by the Fed this year, but a fall in Treasury yields kept declines in check.

Richmond Fed President Thomas Barkin said the report was "about as expected," with prices rising slowly for goods but shelter and services costs still increasing at a more vigorous pace.


However, both Barkin and Cleveland Fed President Loretta Mester signalled that more evidence is need for full conviction that it is appropriate to cut interest rates in March.


The market’s upward momentum wanes after 2023 on still-hot readings. Another report showed the number of people filing new claims for unemployment benefits unexpectedly fell last week.


Wells Fargo Investment Institute boosted its 2024 year-end target for the S&P 500 from 4,800 to 5,000, citing an improved economic outlook and expectations of interest-rate cuts through the year.


The bank also upgraded the global energy sector to "favourable" from "neutral", expecting oil prices to finish the year higher after bottoming out.

SPXUSD

Despite a muted start, the trend remains bullish as long as the benchmark index closes above the 50 EMA. A breakout of 4,800 could point to the potential for another blistering year.


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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