Markets Float Higher Ahead of this Week’s CPI Report

by Sequoia Financial Group
by Sequoia Financial Group

Last week featured few macroeconomic and corporate updates. The market remained in wait-and-see mode in anticipation of this week’s CPI report, but the path of least resistance was higher on renewed hopes of Fed easing and continued disinflation. The major indices marked a third straight week of gains, with the S&P 500 less than 1% from its March record close. Markets have reacted positively to recent softer economic data (i.e. bad news is good news) and to falling Treasury yields (the 10-year fell roughly 25bps from its recent high).

US equities rose in Monday trading, closing at session highs. The S&P and NASDAQ both advanced for the third consecutive session, extending the previous week’s gains after three weeks of declines. Volumes remained low and there were few catalysts behind the day’s upside.

US equities ended mostly higher on Tuesday but ended near session lows. Nvidia and Tesla were the day’s notable decliners.

Equity markets were mixed on Wednesday in quiet trading with few catalysts to process.

Thursday saw equity markets ending near session highs. Weekly initial jobless claims rose unexpectedly to 233K after weeks of hovering near the ~211K range.1 New York and California saw the largest increases while Iowa and Florida saw the largest declines.1 Equity markets reacted positively to the report as any signs of a weakening labor market alleviates recent inflationary concerns.

US equities were mixed in Friday’s session and ended the day off their best levels. May consumer confidence fell to a six-month low as inflation expectations rose.2 The University of Michigan Consumer Sentiment Survey was reported at 67.4, well below estimates of 76.9. 2 The deterioration in sentiment reflects broad worries across age, income, and education groups on the direction of inflation, unemployment, and interest rates. 2 Additionally, inflation expectations ticked higher with the one-year outlook rising to 3.5%, the highest level since last November, with consumers highlighting high gas prices and mortgage rates among their concerns. 2



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