This Week's Fed Rate Decision Is Crucial for Risk Assets
Market Influencers: The stock market is poised for a pivotal week with key events including a Federal Reserve decision, Big Tech earnings reports, and talks between Donald Trump and Xi Jinping, but the Fed's actions are expected to have the most significant impact on market movements.
Inflation and Rate Cuts: Recent inflation data has provided the Fed with the flexibility to continue cutting interest rates, which is seen as a major support for the market amid slowing growth and a softening labor market.
Earnings Season Expectations: Big Tech companies, including Microsoft, Meta, and Apple, are set to report earnings, with Wall Street anticipating a 13% growth in profits, driven by strong demand in the Information Technology sector and AI investments.
Trade Talks Outlook: The upcoming meeting between Trump and Xi Jinping may lead to a preliminary trade agreement, which could ease tensions, although investors remain cautious about the potential for rapid changes in trade dynamics.
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Fed's Goolsbee: US Is Not on Track to Achieve 2% Inflation, Rate Cuts Rely on Reduced Inflation
U.S. Consumer Prices: U.S. consumer prices rose lower than expected in January, with a 0.2% increase according to the Consumer Price Index (CPI) report, indicating a cooling labor market.
Inflation Expectations: U.S. citizens expect lower inflation in the near term, with one-year inflation expectations standing at 3.1% in January, down from 3.4% in December.
Federal Reserve Insights: Federal Reserve Bank of Chicago President Austan Goolsbee suggested that further rate cuts could occur if inflation trends towards the 2% target, although current inflation remains around 3%.
Market Reactions: U.S. equities ended the week mixed, with the S&P 500 ETF slightly declining while other ETFs, like the Invesco QQQ Trust, saw minor gains, reflecting bearish retail sentiment around the S&P 500.
Supreme Court Expected to Announce Next Opinion Day on February 20 in Ongoing Trump Tariffs Case — Latest Prediction Market Odds Revealed
Supreme Court Schedule: The U.S. Supreme Court is set to return on February 20 after a four-week recess, with significant cases including President Trump's tariff policy on the agenda.
Upcoming Opinions: The Court is expected to issue opinions on February 24 and 25, in addition to those scheduled for February 20.
Betting Markets Insights: Prediction markets indicate that bets regarding the Supreme Court's potential decisions are valued at over $9 million, with varying expectations on rulings favoring Trump.
Probability of Rulings: Data shows a 29% chance that the Supreme Court will rule in favor of Trump's tariffs by 2028, with PolyMarket bettors slightly more optimistic at 30%.
CPI Report: January's Annual Inflation Rate Hits 2.4%, Falling Short of Wall Street Projections
Core CPI Increase: The Core Consumer Price Index (CPI), excluding food and energy, rose by 0.3% in January, up from a 0.2% increase in December, with an annual rate of 2.5%, aligning with expectations.
Food and Energy Costs: Food costs increased by 0.2% in January, while energy costs decreased by 1.5%, indicating mixed trends in consumer prices.
Market Reactions: Following the CPI report, the 10-year Treasury yield fell to 4.062%, while the 30-year yield declined to 4.699%, reflecting market adjustments to inflation data.
Retail Sentiment: Retail sentiment around the S&P 500 ETF was described as "bearish," with mixed performance observed in U.S. equities during the trading session.
Bessent Claims Trump Administration Aims to Mitigate Risks Rather Than Sever Ties with China: Report
Treasury Secretary's Statement: Treasury Secretary Scott Bessenet stated that the Trump administration prefers to de-risk rather than decouple from China, emphasizing a dual strategy of engagement and fair trade.
Concerns Over Free Trade: Bessenet highlighted that free trade with China has been unfair, resulting in American workers being adversely affected in the process.
Experts Caution That CPI May Exceed Expectations: 'The Details Will Be Crucial'
January Inflation Trends: January inflation has historically been higher, with the Boston Fed noting that seasonal factors and frequent price resets can distort inflation data, potentially leading to elevated readings.
Market Expectations: Analysts anticipate that the Consumer Price Index (CPI) for January may exceed expectations, with predictions of a 0.3% increase, while annual growth rates are forecasted at 2.5%.
Investor Caution: Market experts warn investors to be aware of the potential for unexpectedly high inflation, emphasizing the importance of understanding underlying inflation trends as the CPI report approaches.
Broader Market Impact: The CPI report comes amid a broader market sell-off, with major indices like the Dow Jones and S&P 500 experiencing declines, reflecting investor sentiment and concerns over inflation.
Futures for Dow, S&P 500, and Nasdaq Decline Following AI-Driven Selloff: Reasons Behind After-Hours Trends for COIN, DKNG, RIVN, AMAT, FSLY
U.S. Stock Market Decline: U.S. stock futures fell on Thursday, with the Nasdaq 100 down 0.08%, S&P 500 down 0.06%, and Dow futures down 0.08%, amid concerns over the potential negative impact of AI on profits across various industries.
Sector Performance: Technology stocks led the decline, with major companies like Cisco and Apple experiencing significant losses, while the Dow Jones Industrial Average dropped 1.3% and the S&P 500 fell 1.6%.
Investor Sentiment: Retail sentiment towards major ETFs was extremely bearish, reflecting caution among investors as they reassess which industries could be disrupted by advancements in AI technology.
Asian Market Retreat: Asian equities also retreated, with the MSCI Asia Pacific Index declining for the first time in six sessions, as investors sought safety in bonds, pushing the 10-year U.S. Treasury yield down to about 4.10%.
Fed's Goolsbee: US Is Not on Track to Achieve 2% Inflation, Rate Cuts Rely on Reduced Inflation
U.S. Consumer Prices: U.S. consumer prices rose lower than expected in January, with a 0.2% increase according to the Consumer Price Index (CPI) report, indicating a cooling labor market.
Inflation Expectations: U.S. citizens expect lower inflation in the near term, with one-year inflation expectations standing at 3.1% in January, down from 3.4% in December.
Federal Reserve Insights: Federal Reserve Bank of Chicago President Austan Goolsbee suggested that further rate cuts could occur if inflation trends towards the 2% target, although current inflation remains around 3%.
Market Reactions: U.S. equities ended the week mixed, with the S&P 500 ETF slightly declining while other ETFs, like the Invesco QQQ Trust, saw minor gains, reflecting bearish retail sentiment around the S&P 500.
Supreme Court Expected to Announce Next Opinion Day on February 20 in Ongoing Trump Tariffs Case — Latest Prediction Market Odds Revealed
Supreme Court Schedule: The U.S. Supreme Court is set to return on February 20 after a four-week recess, with significant cases including President Trump's tariff policy on the agenda.
Upcoming Opinions: The Court is expected to issue opinions on February 24 and 25, in addition to those scheduled for February 20.
Betting Markets Insights: Prediction markets indicate that bets regarding the Supreme Court's potential decisions are valued at over $9 million, with varying expectations on rulings favoring Trump.
Probability of Rulings: Data shows a 29% chance that the Supreme Court will rule in favor of Trump's tariffs by 2028, with PolyMarket bettors slightly more optimistic at 30%.
CPI Report: January's Annual Inflation Rate Hits 2.4%, Falling Short of Wall Street Projections
Core CPI Increase: The Core Consumer Price Index (CPI), excluding food and energy, rose by 0.3% in January, up from a 0.2% increase in December, with an annual rate of 2.5%, aligning with expectations.
Food and Energy Costs: Food costs increased by 0.2% in January, while energy costs decreased by 1.5%, indicating mixed trends in consumer prices.
Market Reactions: Following the CPI report, the 10-year Treasury yield fell to 4.062%, while the 30-year yield declined to 4.699%, reflecting market adjustments to inflation data.
Retail Sentiment: Retail sentiment around the S&P 500 ETF was described as "bearish," with mixed performance observed in U.S. equities during the trading session.
Bessent Claims Trump Administration Aims to Mitigate Risks Rather Than Sever Ties with China: Report
Treasury Secretary's Statement: Treasury Secretary Scott Bessenet stated that the Trump administration prefers to de-risk rather than decouple from China, emphasizing a dual strategy of engagement and fair trade.
Concerns Over Free Trade: Bessenet highlighted that free trade with China has been unfair, resulting in American workers being adversely affected in the process.
Experts Caution That CPI May Exceed Expectations: 'The Details Will Be Crucial'
January Inflation Trends: January inflation has historically been higher, with the Boston Fed noting that seasonal factors and frequent price resets can distort inflation data, potentially leading to elevated readings.
Market Expectations: Analysts anticipate that the Consumer Price Index (CPI) for January may exceed expectations, with predictions of a 0.3% increase, while annual growth rates are forecasted at 2.5%.
Investor Caution: Market experts warn investors to be aware of the potential for unexpectedly high inflation, emphasizing the importance of understanding underlying inflation trends as the CPI report approaches.
Broader Market Impact: The CPI report comes amid a broader market sell-off, with major indices like the Dow Jones and S&P 500 experiencing declines, reflecting investor sentiment and concerns over inflation.
Futures for Dow, S&P 500, and Nasdaq Decline Following AI-Driven Selloff: Reasons Behind After-Hours Trends for COIN, DKNG, RIVN, AMAT, FSLY
U.S. Stock Market Decline: U.S. stock futures fell on Thursday, with the Nasdaq 100 down 0.08%, S&P 500 down 0.06%, and Dow futures down 0.08%, amid concerns over the potential negative impact of AI on profits across various industries.
Sector Performance: Technology stocks led the decline, with major companies like Cisco and Apple experiencing significant losses, while the Dow Jones Industrial Average dropped 1.3% and the S&P 500 fell 1.6%.
Investor Sentiment: Retail sentiment towards major ETFs was extremely bearish, reflecting caution among investors as they reassess which industries could be disrupted by advancements in AI technology.
Asian Market Retreat: Asian equities also retreated, with the MSCI Asia Pacific Index declining for the first time in six sessions, as investors sought safety in bonds, pushing the 10-year U.S. Treasury yield down to about 4.10%.
