Last week was somewhat of a calm before the storm, with markets drifting higher by Friday. Whether you traded large-caps or penny stocks, there were plenty of pockets of opportunity. But it all leads to this week, one of the more critical weeks of September. It also comes during a relatively quiet week with no planned Fed speak and minim economic reports. Of the economic updates, however, will come critical pieces that could dictate the pace or market reaction to rising rates and inflation.
Last week, Fed members, including Chairman Jerome Powell, gave a primarily hawkish outlook on fiscal policy.
“We need to act now, forthrightly, strongly as we have been doing…My colleagues and I are strongly committed to this project and will keep at it,” Powell said at the Cato Institute’s Monetary Conference.
Banks, including Goldman Sachs, have already begun pricing in new hikes. Its forecast for Federal Reserve interest rate hikes now sits at a 75 basis point hike later this month. Expectations were also adjusted higher for November’s Fed meeting and a 50 bps rate hike forecast. Originally, the bank anticipated a 50 bps hike in September and a 25 bps in November. Goldman remains committed to its 25 bps hike forecast for December, however.
“Fed officials have sounded hawkish recently and have seemed to imply that progress toward taming inflation has not been as uniform or as rapid as they would like,” the analysts said in a note.
While the week ahead won’t be as jam-packed with events, it doesn’t mean the upcoming market updates don’t have the potential to move stocks this week.
There isn’t much going on at the top of the week. Of the major market events, the release of Consumer Inflation Expectations might set the stage for sentiment later in the week. This comes out just before the lunch hour at 11 AM ET on Monday.
Tuesday will jump-start the “big economic events” for the week. Consumer Price Index or “CPI data,” as well as Core CPI data, come out before the market opens. Starting at 8:30 AM ET, the stock market will begin digesting the latest August CPI info to gauge what’s happening with inflation and speculate on what the Fed may consider regarding the next round of rate hikes. You’ve also got Redbook data pre-market and the Federal Budget Balance for August in the afternoon.
Wednesday will give more insight into inflation from the producer side of the economy. Producer Price Index data or “PPI data,” as well as Core PPI data, are released before the market opens on September 14th.
Thursday is all about jobs and retail data. Initial and continuing jobless claims form out at 8:30 AM ET along with Retail sales, core retail sales, and Manufacturing Index data.
Friday is much lighter, with one of the only “major” events being the Michigan consumer expectations, consumer sentiment, and inflation expectations.
Red Book data shows sales-weighted year-over-year same-store sales trends. It can signal consumer spending and short and medium-term trends for retail investors and track a wide range of retail categories. Everything from sporting goods and apparel to jewelry and home furnishings is followed closely in the Red Book. The last read was 10.9%, which decreased from the August 30th read of 14.2%. With retail data coming in the second half of the week, Redbook details could give some insight into expectations.
Other than geopolitics, economic data related to inflation and interest rates have ruled the newswires. This week we’ll get the latest round of CPI and PPI data, which could shed some light on the effectiveness of policy moves to curb inflation. Investors will also weigh the data against current expectations of future rate hikes to aid in these inflationary control measures taken by the FOMC.
CPI stands for Consumer Price Index. According to the U.S. Bureau of Labor Statistics, the Consumer Price Index measures “the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available.”
CPI is expected to drop to 8.1% for the trailing 12 months ended in August. This would be lower than the previous read of 8.5%. Core CPI is anticipated to rise 6.1% year-over-year based on estimates and would be slightly higher than the last read of 5.9%.
What does CPI data look like month-over-month? Estimates are that MoM CPI drops to -0.1%, and Core CPI remains constant at 0.3%.
This week we’ve also got producer prices and jobless claims to digest. According to the U.S. Bureau of Labor Statistics, the Producer Price Index or PPI measures “the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services.”
PPI is forecast to come in at 8.9% for August and would be a decrease from the prior read of 9.8%. Core PPI is expected to come in at 7.1%, which would be down from the previous 7.6% read out. What does PPI data look like month-over-month? Estimates are that MoM PPI climbs from -0.5% to -0.1%, and Core PPI increases from 0.2% to 0.3%.
The state of the consumer will be a big focus this week, but so will jobs and the impact on the “pending” or current recession, depending on how you see things. Initial and continuing jobless claims could give a glimpse into the potential for a full-on recession. A tight jobs market has been one of the main things that opponents have leaned on in saying that the “R” word was irrelevant.
Despite two consecutive quarters of negative growth, employment data hasn’t maintained levels consistent with recessionary behavior. With the last read-out, continuing jobless claims came in at 1.47 million. Meanwhile, initial claims were recorded at 222,000. As for the upcoming initial jobless claims, the market is looking for 225,000.
This is just a brief snapshot of the stock market this week and not an exhaustive list of all events for the week ahead. However, these are some of the higher-profile catalysts that could be on the radar for traders and may be something to keep in mind heading into the next week of September.
Whether you’re day trading, swing trading, long-term investing, options trading, or futures trading, every trader and investor in the stock market today is asking the same questions:
The answer to these questions comes down to many factors but none more critical than the Inflation data this week. Stock Market Analysts will be working overtime as countless stock market, and trading predictions come into focus.
True Trading Group is hosting a stock market live Stream to answer all trading & stock market questions and to share their Trading & Stock Market Predictions for Tomorrow!
Get ready to learn to trade and profit LIVE with True Trading Group tonight, 9/11/2022. They host free stock market live trading predictions for the week ahead on YouTube at 8:30 PM ET.
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