Stocks End Mostly Lower Yesterday, Inflation Reports On Deck For Later This Week

Market Moves You Need to See Stocks End Mostly Lower Yesterday, Inflation Reports On Deck For Later This Week [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks End Mostly Lower Yesterday, Inflation Reports On Deck For Later This Week [Stocks End Mostly Lower Yesterday, Inflation Reports On Deck For Later This Week]Image: Shutterstock Stocks closed mostly lower yesterday, but well off their intraday lows, and thus keeping the lion's share of their gains from Monday intact. Yesterday's NFIB Small Business Optimism Index rose to 91.9 vs. last month's 90.6 and views for the same. And the International Trade in Goods and Services report showed the trade deficit in both goods and services shrank to -$63.2 billion vs. last month's -$64.5B and the consensus for -$64.8B. Today we'll get MBA Mortgage Applications, and Wholesale Inventories. But the report(s) everybody's really waiting for is Thursday's Consumer Price Index (CPI) retail inflation report, and Friday's Producer Price Index (PPI) wholesale inflation report. Both are expected to continue their downward trend of lower inflation readings. But any divergence from this trend (be it a slowing of the downtrend or possibly a tick up), could signal to the Fed that their first rate cut might need to come later (May) rather than sooner (March). While it's hard to imagine anything altering the Fed's expectation for at least a -75 basis point rate cut this year, the debate right now mostly centers on when the Fed will begin cutting rates. Continuing declines in inflation helps move that start date up, while slower declines in inflation (or worse, an uptick), would push that date back. What's the big deal over a couple of months? Because this is an election year, And the Fed is likely to be very conscious as to not look like they are cutting rates (or not cutting rates), to favor or disfavor any party. And the closer those rate decisions get to November, the more political some would view it. Whether that view is right or wrong is irrelevant. Nonetheless, the Fed will likely try to steer clear of being accused of any political motivation. So that suggests getting their cuts out of the way sooner rather than later – assuming the data cooperates. Additionally, last week it was reported that the EU saw an increase in headline consumer price inflation in December, rising to 2.9% y/y vs. November's 2.4%. Although, it should be noted that the core rate continued to fall coming in at 3.4% vs. last month's 3.6%. Nonetheless, it was a bit of a surprise. And why all eyes will be on this week's U.S. inflation reports. After that, we'll get one more inflation report on January 26 with the Personal Consumption Expenditures (PCE) report (which is the Fed's preferred inflation gauge). And then the very next week we'll get the FOMC announcement on January 31. In the meantime, we'll see if the markets can consolidate recent gains, and begin their next leg up. See you tomorrow, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research [See Zacks' Top Stocks for Free]( Starting today, you can get instant access to the latest picks from our time-proven strategies which since 2000 have soared far above the market. While the S&P 500 averaged +6.2% per year, our top strategies averaged gains as high as +46.4%, +49.5% and +55.2% per year. You'll also get our free Special Report, Top 10 Stock Screening Strategies that Make Money which spells out the formulas behind these top strategies. 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