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  • Writer's pictureJade Rossback

Stocks End Mixed On Friday, But Up For The Week

Stocks End Mixed

Stocks end mixed on Friday with the Dow up modestly, while the S&P and Nasdaq were down modestly. But they were all up for the week, making it 3 up weeks in a row for the big three indexes, and the 12th up week out of the last 13 weeks.

Friday's Personal Consumption Expenditures (PCE) index (which is the Fed's preferred inflation gauge), showed headline inflation increasing by 0.2% m/m as expected. The y/y rate came in at 2.6%, matching last month's pace, and just under the consensus for 2.7%. The core rate (ex-food & energy), was up 0.2% m/m as well, also as expected. On a y/y basis, it eased to 2.9% vs. last month's 3.2% and views for 3.0%.

This confirms what the CPI and PPI inflation reports from earlier this month showed, which is that inflation continues to moderate. In fact, this has been the story (declining rates of inflation), ever since mid-2022 when inflation hit its peak. Core CPI at its worst was up 6.6% y/y (now at 3.9%); core PPI at its worst was up 8.2% (now at 1.8%); with core PCE at its worst up 5.3% (now at 2.9%).

The next FOMC announcement on rates is Wednesday, January 31.

While nobody is expecting the Fed to cut rates this week, the possibility of a rate cut as early as March 20, or possibly later on May 1, has helped buoy the market.

The Fed has forecast as many as three, 25 basis point rate cuts this year. Although, plenty of others are forecasting as many as 4-5 rate cuts (100-125 basis points).

Those differences are unlikely to be resolved come Wednesday. Same for the timing (will the cuts begin in March or May?).

But the steadily declining inflation readings do give the Fed the justification they need to lower rates when the time comes. The only thing complicating matters are the persistently hot economic reports, not the least of which were last week's Q4 GDP which came in much higher than expected at 3.3% (vs. views for 2.0%), and the latest Employment Situation report which showed a better than expected 216,000 new jobs were created last month vs. expectations for 164,000.

So everybody will be listening closely to what the Fed has to say later this week. The announcement comes out on Wednesday, 1/31 at 2:00 PM ET, followed by the customary Fed Chair Press Conference at 2:30.

In other news on Friday, the Pending Home Sales Index rose 8.3% m/m, well above last month's 0.0% pace and the consensus for 1.3%. The Index itself came in at 77.3 vs. last month's 71.4.

Earnings season ramps up this week with another 509 companies on deck to report, including marquee names like Super Micro Computer (Monday), Microsoft and Alphabet (Tuesday), Novo Nordisk (Wednesday), Apple, Amazon and Meta (Thursday), and Exxon Mobile (Friday), amongst many others.

After a shaky start this year, the major indexes are all up for the month, so far, with only 3 more days to go.

And that's great news.

As they say, "as goes January, so goes the year."

If so, it's looking like it's going to be another great year for the market.

*Content provided by Zacks Investment Research. An American company dedicated to the production of independent research and investment-related content. It was founded in 1978 by Len Zacks, based on his insights while pursuing his Ph.D. at MIT.

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