New York Stock Market Pauses Ahead of January CPI and Retail Sales Releases

January 13 CPI Release... Expected to Reach 2% Range for the First Time in 34 Months

The three major indices of the U.S. New York stock market showed mixed movements around the flat line in early trading on the 12th (local time). Investors are adopting a wait-and-see stance ahead of this week's release of the January Consumer Price Index (CPI) and retail sales data.

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As of 10:05 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was up 0.07% from the previous trading day, standing at 38,698.04. The large-cap-focused S&P 500 index was down 0.01% at 5,026.16, while the tech-heavy Nasdaq index was up 0.05% at 15,998.17.

By individual stocks, Salesforce is down about 1.2%. Hershey is falling 1.6% after Morgan Stanley downgraded its investment rating to 'underweight' due to a forecast of weakening demand. Diamondback Energy surged about 8.4% on news that it will acquire oil and gas producer Endeavor Energy Partners for $26 billion.

On the New York stock market, the S&P 500 index surpassed the 5,000 mark for the first time ever on a closing basis in the previous trading day. It has risen more than 5% since the beginning of the year. All three indices have risen for five consecutive weeks on a weekly basis. Last week, the S&P 500 and Nasdaq indices rose 1.4% and 2.3%, respectively, while the Dow Jones Industrial Average also edged up slightly. Although strong employment data dampened expectations for an early rate cut in March, corporate earnings surprises and strong big-tech stock prices supported the market's rise.

Experts believe that whether the New York stock market continues its bullish trend depends on whether solid growth is maintained alongside a continued slowdown in inflation.

Mark Happel, Chief Investment Officer (CIO) of UBS Global Wealth Management, said, "U.S. stocks have already priced in enough good news, and I believe this rally is sufficiently supported. However, in an ideal Goldilocks scenario?where the economy is strong and inflation is low?the S&P 500 could reach near 5,300 by the end of the year."

The market is focusing on major economic data releases this week that will influence the timing of the Federal Reserve's (Fed) first rate cut. The January CPI will be released on the 13th. According to Bloomberg's compiled expert forecasts, the January CPI inflation rate is expected to slow significantly to 2.9% year-over-year from 3.4% in the previous month. This would be the first time in two years and ten months since March 2021 that it falls below 3%. The U.S. Labor Department revised December's CPI to a 0.2% month-over-month increase, down from the previous estimate of 0.3%. Retail sales for January will be announced on the 15th, and the January Producer Price Index (PPI) will be released on the 16th.

Jay Hatfield, CEO of Infrastructure Capital Advisors, said, "Both CPI and PPI need to come out well, but I remain optimistic. I think the market will continue the rally over the next one to two weeks. It may stagnate while waiting for inflation data."

Attention is also focused on remarks from senior Federal Reserve officials around the January inflation announcements. This week, speeches are scheduled from Fed Governor Michelle Bowman, Minneapolis Fed President Neel Kashkari, and Richmond Fed President Tom Barkin.

Corporate earnings announcements will continue. This week, 61 companies listed on the S&P 500, including Lyft, Instacart, DoorDash, and Coca-Cola, will release their earnings.

The yield on the U.S. 10-year Treasury note is trading slightly lower at around 4.18% compared to the previous trading day. The 2-year Treasury yield also fell slightly to about 4.48%.

International oil prices, which rose last week due to Middle East tensions and supply concerns, are declining. West Texas Intermediate (WTI) crude is down $0.32 (0.4%) to $76.52 per barrel. Brent crude is trading down $0.54 (0.7%) at $81.65 per barrel.