Inflation Data Does Not Move Stock Market Outlook

Global stock indices moved sideways this past Thursday, indicating that the stock market outlook remains unchanged. Analysts had been awaiting U.S. inflation data for December, particularly the Consumer Price Index (CPI), which ultimately exceeded expectations.

As a result, the Federal Reserve’s plans to cut rates in the coming year now appear more questionable. Originally, the Fed intended to implement three rate cuts over the course of 2024, with some traders even hoping for as many as six rate cuts. However, this new data casts doubt on these expectations. Despite this, we have not observed significant volatility in stocks so far, although the stocks continue to be monitored for any signs of becoming volatile stocks.

In detail, the CPI rose by 0.3% in December, exceeding the 0.2% rise predicted by analysts, resulting in a 3.4% increase for the year. While this inflation rate is higher than expected, analysts do not necessarily view it as a negative sign. They believe it could be a minor fluctuation and do not see it as an indicator of future inflation increases. In fact, in the long term, inflation appears to be decreasing, which could impact the stock market outlook positively.

Market Movements and Perspectives Amidst Rate Cut Speculations

Most analysts still anticipate that the Fed will proceed with its planned rate cuts. However, one analyst suggested that the rate cut scheduled for March might be too premature and could be postponed. This ambiguity contributes to the ongoing evaluation of the stocks and their potential to become more volatile stocks.

The movement in stock indices was modest. The Dow Jones rose by 0.04%, and the Nasdaq nearly broke even. Meanwhile, the S&P 500 experienced a slight decrease of 0.07%. European stocks saw more significant losses, with the STOXX 600 index falling by 0.77%. Globally, the MSCI world stock index fell by only 0.06%.

A noteworthy development occurred when Microsoft briefly surpassed Apple, momentarily becoming the most valuable company in the world, reflecting the dynamic nature of the stocks in the current market.

During this period, Treasury yields declined slightly, pulling the dollar down with them yet leaving the overall stock market outlook unaffected. This suggests that while individual stocks may experience volatility, the broader stock market outlook remains steady.