Stocks End Mixed, But Well Off Their Lows, PPI Inflation Report On Deck This Morning

Market Moves You Need to See Stocks End Mixed, But Well Off Their Lows, PPI Inflation Report On Deck This Morning [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks End Mixed, But Well Off Their Lows, PPI Inflation Report On Deck This Morning [Stocks End Mixed, But Well Off Their Lows, PPI Inflation Report On Deck This Morning]Image: Shutterstock Stocks closed narrowly mixed yesterday with the Dow eking out a tiny gain, the S&P showing a minor loss, and the Nasdaq unchanged on the day. Although, all the indexes looked much different early on. After opening modestly higher, they quickly fell into the red. At their worst, the Dow was down -0.72%, the S&P was down -0.91%, and the Nasdaq was down by -1.13%. But by mid-afternoon they began erasing those losses and briefly turned positive again before finishing mixed by the close. Yesterday's Consumer Price Index (CPI) retail inflation report came in slightly higher than expected with the headline number increasing by 0.3% m/m vs. the consensus for 0.2%, while the y/y rate was up 3.4% vs. last month's 3.1% and views for 3.2%. The core rate (ex-food & energy) was up 0.3% vs. estimates for 0.2%, while the y/y rate came in at 3.9% vs. last month's 4.0% and views for 3.8%. While both numbers came in a bit higher than expected, the headline actually increased vs. last month, while the core rate continued to fall. That was enough to weigh on prices for much of the day. But with the difference so small, the market quickly recovered. Although, traders also probably didn't want to get ahead of the market before this morning's Producer Price Index (PP) wholesale inflation report. The PPI is expected to show headline inflation rose 0.2% m/m vs. last month's flat reading of 0.0%, while the y/y rate is expected to be up 1.3% vs. last month's 0.9%. The core rate is expected to be up 0.2% m/m as well vs. last month's 0.0%. And the y/y rate is expected to remain at 2.0%, the same as last month's pace. Barring any large surprise (and yesterday's CPI suggests otherwise), the PPI shouldn't trigger much volatility. And if things come in largely as expected, it should support the narrative that rates will be coming down this year, and maybe sooner rather than later. Of course, there's still one more inflation report after that on January 26. That's the Personal Consumption Expenditures (PCE) report (which is the Fed's preferred inflation gauge). That's 2 weeks away. But if the CPI and PPI reports don't pack much of a surprise, it's unlikely the PCE will either. The next FOMC announcement on rates is on January 31. In other news, yesterday's Weekly Jobless Claims fell -1,000 to 202K vs. the consensus for 209K. After this week's inflation reports, we could see some focus on Washington as the deadline for reaching a budget deal comes due on January 19, which is next Friday. There appears to be a tentative bipartisan agreement on the total number, but there also appears to be some disagreement on the details that go into it. Congress is known for their brinkmanship, so much so that the rating agency Moody's cited that as one of the reasons for their reduced ratings outlook a few months ago. If Congress can button this up without a shutdown, that too would be beneficial to the market. In the meantime, with one more day to go, stocks are poised for another positive weekly close. And that would make it 10 up weeks out of the last 11 for all of the big three indexes. Best, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research [Buy These Stocks BEFORE They Report Earnings]( [Earnings Surprises] Next week, 113 companies are set to report earnings. 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