U.S. stocks are facing a rocky start to 2024, with the first full trading week of the new year poised to set the tone for the months ahead. The Federal Reserve’s decision on interest rates, inflation control, and the release of important economic data this week are expected to significantly affect market trends.
The Consumer Price Index (CPI) for December, set to be released on Thursday, and the producer price index (PPI) for the month, scheduled for release on Friday, will be closely watched as factors that could impact market trends. Economists surveyed by The Wall Street Journal predict that CPI is expected to rise 0.2% in December, as well as a 0.2% rise in the core CPI. This could widen year-on-year growth to 3.3%, setting back progress on inflation.
The coming week will also provide insights into the strength of the U.S. consumer and prospective outcomes for the U.S. economy. Mark Hackett, Nationwide’s director of investment research, emphasized that evaluating economic information related to CPI, PPI, banks, and consumer credit will provide clarity on the market and earnings outlook for the first quarter.
Earning reports will also be crucial as JPMorgan Chase & Co. and Delta Air Lines (DAL) are set to report earnings on Friday, kicking off the earnings season. Analysts predict that companies might give a cautious view of performance in the coming year, as bottom-up estimates for S&P 500 fourth-quarter earnings growth have fallen drastically.
The stock market has seen significant growth in the last year, with the S&P 500 index soaring over 24%. Large-cap technology stocks played a significant role, and excitement over the prospects of AI resulted in substantial gains.
Additionally, the Consumer Electronics Show (CES) held in Las Vegas this week showcased significant technological innovations, with AI, mobility, and healthcare leading the themes. Cryptocurrencies were also in the spotlight, with the SEC expected to make a decision on the approval of a spot Bitcoin ETF.
Many eyes are on the SEC’s decision, as Bitcoin prices have risen more than 12% this year. A decision in favor of approving the Bitcoin ETF could potentially have a significant impact on Bitcoin’s supply and demand balance.
Overall, the coming week and the decisions made are expected to have a substantial impact on market trends and economic outlook for the year ahead. Investors will be closely monitoring developments to navigate their investment strategies accordingly.