In a relentless ascent over the past two months, the US stock market has propelled the benchmark S&P 500 to a nearly two-year high, exceeding 4,600.
Fueled by a mix of factors, including the easing of macroeconomic challenges, particularly in inflation and economic growth, investors are increasingly confident that the Federal Reserve will refrain from further rate hikes. In fact, there are now growing convictions that the central bank is set to begin cutting rates at some point in 2024.
As the market faces a crucial week ahead, marked by the release of a new batch of economic data, investors are bracing for another upswing in the S&P 500 or a fresh wave of volatility, contingent on the nature of the data released.
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CPI data, Fed meeting, and Costco earnings in the same week
On December 10, popular stock news X account StockMKTNewz cautioned investors to brace for “a crazy week ahead”, citing numerous events and releases that could affect market sentiment.
Notably, the account shared several images outlining the most important catalysts that have the potential to make an impact on the market. The most significant ones include the upcoming Fed policy meeting, inflation data for November, and the earnings report of the retail giant Costco (NASDAQ: COST).
Why are these factors important for the stock market?
On Tuesday, December 12, the US Bureau of Labor Statistics (BLS) is set to release the latest consumer price index (CPI) report, which will reveal if inflation rates continued to decline in November. In this case, the pressure on the Fed will further alleviate, and will likely lead to increased bullish pressure in the stock market.
In this context, there is every chance that the central bank will keep short-term rates unchanged at their December 12-13 meeting. The reason for this is the clear indication that the current level of rates is doing a good job of keeping inflation under control and slowing down the US economy’s growth.
The rate decision will officially be announced at 2 pm ET on December 13, after which Fed Chair Jerome Powell will hold a press conference that will also be closely monitored by investors.
Then, on December 14, retail juggernaut Costco will unveil its earnings report. Considering that it is the third-biggest retailer in the US by revenue, Costco’s financial performance is carefully monitored by investors and analysts.
This is because these reports offer insights into broader economic trends and consumer spending patterns. Positive earnings and robust sales figures from major retailers can indicate strong consumer confidence and overall economic stability, while weaker results may suggest challenges in the broader macroeconomic environment.
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