S&P 500 (SPY) Report – 12/12/23

Good morning, traders!

The S&P 500 ($SPY) is trading near yesterday’s close. Let’s get into it…

Stock futures are flat this morning as investors digest new inflation data. The consumer price index (CPI), a key indicator of inflation, reported a 3.1% increase in November compared to the previous year, aligning with economists’ predictions. This data is significant for investors, especially as major stock indexes like the Dow, S&P 500, and Nasdaq Composite have been experiencing steady gains recently.

The positive trend in the stock market is noteworthy, with major indexes achieving their highest points since early 2022. This surge is attributed to expectations of reduced Federal Reserve rate hikes, as suggested by UBS analysts. Cooling inflation and favorable labor market conditions have also contributed to this optimism. Investors are now eagerly awaiting the Federal Reserve’s final monetary policy announcement for the year.

The November CPI data showed a 0.1% increase from the previous month, and a 3.1% rise on a year-over-year basis, which was in line with forecasts. Excluding volatile components like energy and food, the CPI saw a 0.3% monthly and 4% annual increase, matching expectations. This data plays a crucial role in guiding the Federal Reserve’s policy decisions and investor expectations.

Economists and analysts are forecasting a potential shift in the Federal Reserve’s interest rate policy by mid-next year. According to an analyst survey, there is a growing expectation of rate cuts starting in June, with further reductions anticipated in July. The survey also indicates increased optimism for a ‘soft landing’ of the economy, with reduced chances of a recession in 2024. This outlook reflects a more hopeful perspective on the economy’s direction in the coming year.

Tuesday Economic Events:
NFIB Small Business Index 6:00am ET
CPI 8:30am ET – High Volatility Expected
Redbook Sales 8:55am ET
Quarterly Services Survey 10:00am ET
30-Yr Bond Auction 1:00pm ET – High Volatility Expected
Treasury Statement 2:00pm ET
API Crude Oil Data 4:30pm ET

Fed Speaker Scheduled:
No Fed Speakers Scheduled

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