Inflation data may trigger a rise on Wall Street, as indicated by the major U.S. index futures which suggest a moderate surge as traders resume work after the long Easter break.
Traders finally have the chance to respond to the crucial U.S. consumer price inflation data released during Good Friday's market closure. The report by the Commerce Department showed a slightly less-than-predicted rise in consumer prices, while the yearly rate of growth aligned with expectations.
Consumer prices recorded a 0.3 percent rise in February, following a revised upward climb of 0.4 percent in January. This slightly contradicted economists' prediction of a 0.4 percent advancement compared to the initially reported 0.3 percent increase of the previous month.
Additionally, the report revealed that the annual consumer price growth rate modestly increased to 2.5 percent in February, up from 2.4 percent in January, meeting expectations.
Excluding food and energy prices, core consumer prices increased by 0.3 percent in February, following an upwardly revised increase of 0.5 percent in January, matching expectations. The annual rate of core consumer price growth decelerated to 2.8 percent in February, down from a revised upward figure of 2.9 percent in January.
These inflation figures, favored by the Federal Reserve, were included in the Commerce Department's report on personal income and spending in February. According to Jeffrey Roach, Chief Economist for LPL Financial, the data should provide convincing reasons for the Fed to start its rate normalization process when it meets in June.
Late in Wednesday's session, the market saw a strong upward move, but stocks generally lacked direction during Thursday's trading. Nonetheless, the Dow and the S&P 500 achieved new record closing highs. While the Nasdaq slightly dropped, the Dow and the S&P 500 narrowly gained.
For the holiday-shortened week, the Dow and S&P 500 advanced, but the Nasdaq fell slightly. Traders were seemingly hesitant to make big moves before the expected Commerce Department report on personal income and spending, which includes inflation figures preferred by the Federal Reserve.
Jerome Powell, Fed Chair, will partake in a moderated discussion at the Federal Reserve Bank of San Francisco Macroeconomics and Monetary Policy Conference during the holiday.
The attention is mostly on Friday's inflation data while other presented U.S. economic data is mostly disregarded. First-time U.S. unemployment benefits claims were reported to have unexpectedly decreased in the week ending March 23rd.
The U.S. economy reportedly grew more than originally estimated during the fourth quarter of 2023, as revealed by revised data. A National Association of Realtors report also indicated a significant rebound in pending home sales in February.
In a surprising turn of events, data from the University of Michigan revealed an unexpected surge in U.S. consumer sentiment for March. The consumer sentiment index reading for the month was revised up to 79.4 from the initial reading of 76.5. This is notably higher than the final reading for February, which was at 76.9.
The majority of major sectors reported minimal movements, reflecting the general lackluster performance of broader markets. However, gold stocks saw a significant rally from the previous day's session, driving the NYSE Arca Gold Bugs Index up by 2.8 percent. This surge coincided with the sharp rise in gold prices.
Considerable strength was also observed amongst oil producer stocks, influenced by the sharp increase in crude oil prices. This drove the NYSE Arca Oil Index up by 1.4 percent. Notably, housing, transport, and natural gas stocks also showed significant strength. On the other hand, biotechnology stocks showed some weakness.
Regarding other markets, crude oil futures were slightly down to $82.87 per barrel after a hefty surge to $83.17. Contrarily, gold futures jumped to $2,268.90 an ounce. As for the currency exchange, the U.S. dollar held moderately steady against the yen and euro.
Asian stock markets presented a varied performance due to thin holiday trading. However, hopes for a potential interest rate cut by the Federal Reserve in June, boosted by soft U.S. inflation data, kept the dollar steady.
U.S. inflation saw a moderate increase in February 2024 according to the personal consumption expenditures (PCE) price index, whilst consumer spending proved resilient. Fed Chair, Jerome Powell, noted that this was the kind of inflation data desired, while also acknowledging the risks of keeping interest rates as they are.
Gold trading hit a historical high, while oil prices saw a slight increase due to expectations of tighter supply from OPEC+ and attacks on Russian refineries.
In China, the Shanghai Composite Index rose by 1.2 percent following the expansion of manufacturing activity. Japanese markets, however, took a hit, leading to a two-week low due to the strengthening yen. Notably, the South Korean markets remained relatively flat.
The European markets were closed for Easter Monday.
The Institute for Supply Management is due to release its report on manufacturing activity in March. Expectations suggest a slight rise to 48.4 from 47.8 in February, indicating contraction given a reading below 50.
At 10 am ET, the Commerce Department is set to publish its data on February's construction expenditure. Following a minor decrease of 0.2% in January, the expenditure is forecasted to rebound by 0.6% in February.
In other events, Federal Reserve Board Governor Lisa Cook is anticipated to deliver her acceptance speech at a Lifetime Achievement Awards Ceremony. The event, set for 6:50 pm ET, is organized by the Cook Center at Duke University.
Turning our attention to the stock market, 3M (MMM) shares are likely to experience a surge. This follows the successful division and launch of Solventum Corporation, an independent entity initially part of 3M's health care unit.
In the tech industry, Micron Technology (MU), a semiconductor manufacturer, is predicted to see an uptick in its initial share price. This bullish outlook results from Bank of America's decision to increase its price estimate for Micron's shares from $120 to $144.
Conversely, MicroStrategy (MSTR) shares might experience a downturn. This comes after the company's Executive Chairman, Michael Saylor, reportedly offloaded approximately 4,000 shares of the enterprise's stock in the previous week.
