January CPI Index Confirms Inflation, Markets Respond to Economic News
By The U.S. economy has been facing an uphill battle with inflation in recent months, and the latest Consumer Price Index (CPI) report only confirms that this issue is here to stay. The CPI jumped 0.5% in January, up 6.4% from a year earlier, while the core CPI, which excludes food and energy, advanced 0.4% last month and was up 5.6% from the same time last year.[0] Economists have predicted that the overall consumer price index will rise 0.5% in January and the annual rate should slip to 6.2% from 6.5%.[1]
The Federal Reserve has been attempting to bring prices under control by raising interest rates, but this strategy increases the risk of a recession in 2023.[2] Inflation is proving to be a difficult issue to tackle, as it is tied to the hot labor market and rising wages.[3]
Treasury yields have risen sharply since early February, acting as a headwind to the stock market rally. The markets seem to be leaning towards a third hike occurring in June or July, however, the likelihood of this happening decreased slightly on Wednesday.[4] The yield of the 10-year Treasury note increased by 5 basis points to reach 3.81%, the highest point
On Tuesday, Cisco Systems (CSCO) reported Q2 revenue of $13.59 billion, above the consensus of $13.43 billion and raised its full-year revenue forecast to +9% to +10.5% from a previous estimate of +4.5% to +6.5%, stronger than the consensus of +5.7%.[5] CSCO stock rose 1.6% to 48.45 on Wednesday, retaking the 50-day line.[4]
Twilio (TWLO) reported Q4 revenue of $1.02 billion, above the consensus of $1.00 billion.[5] The communications software firm authorized a $1 billion share buyback program.[5] TWLO stock rose more than +18%.
The Nasdaq Composite ended the day up 0.6% at 11,960, while the S&P 500 finished down 0.03% at 4,136, and the Dow Jones Industrial Average dropped 0.5% to 34,089.[6] Oil continued to barrel lower as the dollar rose and U.S. stockpiles were estimated to have grown.[7] Futures of West Texas Intermediate (WTI) crude, which is the U[7]
0. “Traders Capitulate, Abandoning Fed Rate Cut Bets After CPI Spike” Yahoo News, 14 Feb. 2023, https://news.yahoo.com/traders-capitulate-abandoning-fed-rate-213611625.html
1. “U.S. Treasury yields slip as investors digest inflation data” CNBC, 17 Feb. 2023, https://www.cnbc.com/2023/02/17/us-treasury-yields-investors-digest-inflation-data.html
2. “Wholesale prices surge again, PPI shows, in sign U.S. inflation is unlikely to ease quickly” MarketWatch, 16 Feb. 2023, https://www.marketwatch.com/story/wholesale-inflation-surges-in-early-2023-ppi-shows-2efefb24
3. “CPI: Prices rise 6.4 percent in January, seventh month of easing inflation” The Washington Post, 14 Feb. 2023, https://www.washingtonpost.com/business/2023/02/14/inflation-easing-cpi-january/
4. “Dow Jones Futures Fall But Market Rally Keeps Climbing; Shopify Leads 10 Earnings Movers | Investor's Business Daily” Investor's Business Daily, 16 Feb. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-market-rally-keeps-climbing-shopify-roku-cisco-are-key-earnings-movers
5. “Strength in U.S. Producer Prices and Hawkish Fed Speak Weighs on Stocks” Barchart, 16 Feb. 2023, https://www.barchart.com/story/news/14274433/strength-in-u-s-producer-prices-and-hawkish-fed-speak-weighs-on-stocks
6. “S&P 500, Dow, Nasdaq finish mixed as Fed debate continues” Seeking Alpha, 17 Feb. 2023, https://seekingalpha.com/news/3937828-sp-500-dow-nasdaq-finish-mixed-as-fed-debate-continues
7. “Stock market news today: Stocks rise after strong retail sales data” Yahoo News, 15 Feb. 2023, https://news.yahoo.com/stock-market-news-today-february-15-2023-130622082.html
