The Personal Consumption Expenditures (PCE) price index — the Federal Reserve's preferred measure of inflation — rose 0.6% in January and 5.4% from last year. On a “core” basis, which excludes volatile food and energy components, prices rose 0.6% for the month and 4.7% from last year. This was the biggest monthly increase since June, indicating that stubbornly high inflation is taking its time to return to pre-pandemic levels.
In the bond market, the 10-year Treasury yield (US10Y) fell 3 basis points to 3.93%, while the 2-year yield (US2Y) dipped about a basis point to 4.70%.
Today at 10:00 a.m., new home sales figures will be released. It is anticipated that January's figure will indicate a 0.6% growth, much less than the 2.3% boost recorded in the prior month.
At 10 a.m., traders are anticipating new home sales data. Dow Jones economists are expecting an increase of 0.6% in new home sales for the month of January. The 2.3% increase from the previous month is a smaller increase.
At the same time, forecasters see the personal income reading at +1.2% M/M compared to the expected +1.0% M/M level. January personal spending is expected to come in at +1.2% M/M versus the anticipated +1.4% M/M. The revision of February Michigan consumer sentiment is expected to arrive at 66.4.
Hawkish comments from Cleveland Fed President Mester weighed on stocks and pushed bond yields higher when she said the Fed is “going to have to do a little more to get back to price stability of 2%,” and she still sees raising the fed funds rate “somewhat” above 5% and staying there for a time.
Stocks slumped after the hotter-than-estimated inflation reading bolstered the case for the Federal Reserve to keep rates higher for longer, which could make the odds of a soft landing look slimmer. The S&P 500 experienced its worst weekly decline since early December, with the slide continuing. The Nasdaq 100, which consists heavily of tech stocks, fell by approximately 2% as the two-year yield for the United States Treasury climbed to 4.8%, its highest point since The dollar increased in value.
0. “Stock market news today: Stocks slide after hotter-than-expected key inflation print” Yahoo News, 24 Feb. 2023, https://news.yahoo.com/stock-market-news-today-february-24-2023-104349492.html
1. “Dow falls more than 300 points after Fed’s favorite inflation gauge runs hotter than expected” MarketWatch, 24 Feb. 2023, https://www.marketwatch.com/story/u-s-stock-futures-weaken-ahead-of-key-inflation-data-efb982a2
2. “Dow Jones Dives 400 Points On Hot Inflation Report; Tesla Stock Skids” Investor's Business Daily, 24 Feb. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-fall-200-points-ahead-of-key-inflation-report/
3. “Stock Market News Today: Stocks in the Red after Hot Inflation Report” TipRanks, 24 Feb. 2023, https://www.tipranks.com/news/stock-market-news-today-futures-trend-down-ahead-of-key-economic-data
4. “Dow drops more than 400 points as a hot inflation report rattles Wall Street: Live updates” CNBC, 24 Feb. 2023, https://www.cnbc.com/2023/02/23/stock-market-today-live-updates.html
5. “Nasdaq, S&P, Dow fall on hot PCE inflation data” msnNOW, 24 Feb. 2023, https://www.msn.com/en-us/money/markets/nasdaq-sandp-dow-fall-on-hot-pce-inflation-data/ar-AA17T1gw
6. “Markets Today: Stock Indexes Fall as PCE Inflation Accelerates” Barchart, 24 Feb. 2023, https://www.barchart.com/story/news/14522916/markets-today-stock-indexes-fall-as-pce-inflation-accelerates
7. “Tech Crushed as Bond Yields Climb on Hot Inflation: Markets Wrap” Yahoo! Voices, 24 Feb. 2023, https://www.yahoo.com/now/asia-stocks-open-mixed-bumpy-224011362.html
8. “Markets Tumble on Inflation and Interest Rate Worries” Investopedia, 21 Feb. 2023, https://www.investopedia.com/markets-tumble-on-inflation-and-interest-rate-worries-7112267
9. “Stock Market Today: Dow, S&P Live Updates for Feb. 24” Bloomberg, 23 Feb. 2023, https://www.bloomberg.com/news/articles/2023-02-23/asia-stocks-to-open-mixed-after-bumpy-us-session-markets-wrap