New York Stock Market Holds Steady Ahead of April CPI and PPI Releases

Retail Sales Data Also Released... Powell Scheduled to Speak

The three major indices of the U.S. New York stock market showed a slightly firm trend in the early trading session on the 13th (local time). The market is awaiting the release of the April Consumer Price Index (CPI) and Producer Price Index (PPI) this week. Since the timing of the Federal Reserve's (Fed) interest rate cuts depends on the inflation trend, the market is closely watching the CPI and PPI indicators to be released this week.

As of 9:48 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was up 0.31% from the previous session, standing at 39,635.72. The S&P 500, which focuses on large-cap stocks, rose 0.06% to 5,225.86, and the tech-heavy Nasdaq index was trading slightly up by less than 0.01% at 16,341.07.

By individual stocks, GameStop surged 81.56%. Buying momentum gathered after one of the Reddit traders who led the meme stock craze in 2021 posted on the social networking service X (formerly Twitter) for the first time in three years. Apple rose 1.01% on news that it is negotiating with OpenAI to integrate generative artificial intelligence (AI) technology into the iPhone.

Investors' attention is focused on the inflation indicators to be announced this week.

The April CPI will be released on the 15th. The CPI exceeded market expectations in all months from January to March this year. Even if the April CPI only meets expert forecasts, the market is expected to feel relieved. However, if it again exceeds expert expectations, it is likely to cause a significant shock to the market. The market expects the April CPI to have risen 3.4% year-on-year, and the core CPI, which excludes volatile food and energy prices to show the underlying inflation trend, to have increased 3.6% year-on-year.

The April PPI will be announced on the 14th, one day before the CPI release. The wholesale price index PPI affects the CPI with a time lag. The PPI is expected to have risen 2.2% year-on-year in April, and the core PPI to have increased 2.4% year-on-year.

Investment bank Morgan Stanley said in its April CPI report that disinflation (a slowdown in price increases) will resume and accelerate from the second half of the year, cooling the U.S. economy.

Morgan Stanley analyzed, "From the second half of 2024, with disinflation and monthly figures slowing down, the Fed will gain the confidence it needs that inflation is on a sustained path toward its target," and "the Fed is expected to cut interest rates three times this year in September, November, and December."

The retail sales index, which accounts for two-thirds of the U.S. economy, will also be released. The April retail sales, due on the 15th, are expected to have increased by 0.4% compared to the previous month. This is a slowdown compared to March's 0.7% growth.

This week, remarks from Fed officials, including Fed Chair Jerome Powell, are also widely anticipated. Chair Powell will have a dialogue with Klaas Knot, President of the Netherlands Central Bank (DNB), on the 14th.

Additionally, the trend in the labor market can be confirmed through the weekly initial jobless claims released on the 16th. The market expects initial jobless claims to have decreased to 220,000 from 231,000 the previous week.

Government bond yields are falling. The U.S. 10-year Treasury yield, a global bond yield benchmark, is trading at 4.48%, down 1 basis point (1 bp = 0.01 percentage points) from the previous trading day, and the 2-year Treasury yield, sensitive to monetary policy, is trading at 4.84%, down 2 basis points from the previous trading day.