Tag Archives: Inflation

Business

Stocks edge higher ahead of inflation data, Fed meeting

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U.S. stocks edged higher Monday morning ahead of a busy week for investors, with key inflation data and the Fed’s last policy meeting of the year serving as highlights.

The S&P 500 (^GSPC) inched higher by 0.2% in early morning trading, while the Dow Jones Industrial Average (^DJI) ticked up by 0.3%, or nearly 120 points. The technology-heavy Nasdaq Composite (^IXIC) nudged forward by 0.1%.

All three major indexes ended with losses during Friday’s trading session, capping the worst week for stocks since September. The S&P 500 dropped 3.4% while the Dow fell 2.8%. The tech-heavy Nasdaq fell 4% for that week.

Investors were also keeping an eye on oil early Monday, with WTI crude oil up 0.8% to trade at $71.94 after crude settled at a new low for 2022 on Friday.

Yields on government bonds also slightly dipped, with the yield on the benchmark 10-year U.S. Treasury note at around 3.523% early Monday, off a couple of basis points from Friday’s settlement.

Wall Street geared up for a busy week, as consumer-price data out Tuesday is expected to help inform the expected trajectory of interest rates over the coming months.

Economists surveyed by Bloomberg estimate headline CPI to increase by 0.3% for the second consecutive month, with year-over-year CPI falling from 7.7% to 7.3%.

The Fed will make its next interest-rate decision Wednesday at the conclusion of a two-day policy meeting, with investors expecting a 0.5% increase in the Fed’s benchmark rate. Investors will watch for any clues from the Fed and Chair Jerome Powell to the path of interest rates moving forward.

“We may have these higher interest rates go a bit higher than the market’s currently predicting,” Thomas H. Lee Partners co-CEO Scott Sperling told Yahoo Finance Live on Friday. “And they may sustain for longer than the market is currently predicting.”

In corporate news, Twitter Blue is due to relaunch Monday with a nearly 30% surcharge for iPhone owners. The service still costs $8 per month, but will be $11 for those who purchase the services through the App Store.

Shares of Horizon Therapeutics Public Limited Company (HZNP) surged 14% on Monday after Amgen agreed to acquire the company in an all-cash deal valued at $27.8 billion, marking it the largest healthcare merge of the year, according to the Wall Street Journal.

—

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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Business

Inflation peaked but will remain above pre-Covid levels: Mastercard

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Inflation has already peaked, but it will remain above pre-Covid levels in 2023, said David Mann, chief economist for Asia-Pacific, Middle East and Africa at the Mastercard Economics Institute.

“Inflation has seen its peak this year, but it will still be above what we had been used to pre-pandemic next year,” Mann told CNBC’s “Squawk Box Asia” on Friday. 

It’ll take a few years to return to 2019 levels, he said. 

“We do expect that we go back down in the direction of where we were back in 2019 where we were still debating how many countries needed negative interest rates.”

Central banks around the world have been hiking interest rates as recently as November in response to high inflation.

They include central banks from the Group of 10 countries — such as the U.S. Federal Reserve, the Bank of England and the Reserve Bank of Australia — as well those of emerging markets, such as Indonesia, Thailand, Malaysia and the Philippines, Reuters reported.

The Fed will hold its December policy meeting this week, where it is expected to hike interest rates by 50 basis points. The central bank has raised rates by 375 basis points so far this year. 

“Inflation has become that big challenge. It’s been spiking and staying very high,” Mann said. But he warned that it would be risky if central banks end up hiking rates more than they need to. 

“The challenge is if you’ve lost orientation of where the sky and the ground is, you’re not quite sure where you need to end up,” Mann said. 

It would be a “serious scenario” if central banks “end up going slightly too far and then need to reverse relatively quickly,” he added. 

Consumer spending

Despite high inflation, Mann said, U.S. consumers are still willing to engage in discretionary spending in areas such as travel. 

Travel recovery in the U.S. is strong and people are still choosing to spend on experiences rather than material goods, Mann said.

And they are being frugal about their spending on necessities in order to be able to afford non-essentials, he added.

“There is something in the back of people’s minds that worries them that even though it’s not very likely, it’s still possible that those [Covid] restrictions [will] come back,” he said. 

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Business

Dollar gains as inflation pressures persist; eyes on c.bank meetings

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SINGAPORE, Dec 12 (Reuters) – The dollar climbed on Monday after data on Friday showed U.S. producer prices had risen more than expected last month, pointing to persistent inflationary pressures and a chance the Federal Reserve would keep interest rates higher for longer.

The dollar rose 0.35% against the Japanese yen to 137.05. Against a basket of currencies, the U.S. dollar index eked out a 0.12% gain at 105.18.

The euro was last 0.2% lower at $1.0509.

Sterling fell 0.31% to $1.2229 in Asia trade on Monday, while the Aussie edged 0.34% lower to $0.6773.

The kiwi similarly slipped 0.34% to $0.6393.

The U.S. producer price index for final demand in November was up 0.3% from the previous month and 7.4% from a year earlier, data released on Friday showed, a slight upside surprise from forecasts of a 0.2% and 7.2% increase, respectively.

“There were a little bit of concerns about how inflation would be persistently high and would encourage the Fed to keep policy at a restrictive level for even longer than previously expected,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA).

Traders were also kept on edge in the run up to key risk events this week, including U.S. inflation data and a slew of major central bank meetings.

The Federal Reserve once again takes centre stage, and is widely expected to raise interest rates by 50 basis points, though focus will be on the central bank’s updated economic projections and Fed Chair Jerome Powell’s press conference.

“If he does talk more about the risks to the economy … I think that will probably be considered dovish by markets and, of course, markets love dovish comments and how the FOMC will pay more attention to downside risks to the economy,” said CBA’s Kong.

The Bank of England and the European Central Bank (ECB) will also meet this week, and each is likewise expected to deliver a 50 bp rate hike.

“ECB officials have been telling us that they care more about the underlying inflation, which has remained elevated,” said Kong of the upcoming ECB meeting.

“If they do hike by 50 bps … they might follow up with some pretty hawkish comments in Lagarde’s post meeting conference.”

Ahead of the FOMC meeting, November’s U.S. inflation figures are due on Tuesday, with economists expecting core annual inflation of 6.1%.

“The market reaction to U.S. inflation surprises has been asymmetric so far in 2022, with downside surprises having a larger effect than upside ones,” said analysts at Barclays.

“The inflation print will likely be the bigger driver of the two, (given) the Fed’s guidance toward smaller hikes,” they added, referring to influences on the U.S. dollar.
The offshore yuan eased slightly to 6.9798 per dollar, further pressured by worries over a potential spike in COVID cases as China eases its stringent COVID-19 restrictions.

Reporting by Rae Wee; Editing by Lincoln Feast and Bradley Perrett

Our Standards: The Thomson Reuters Trust Principles.

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Business

Stock futures slip to start the week with Fed meeting, key inflation data on deck

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U.S. stock futures were modestly lower on Sunday evening ahead of a week with several anticipated events in the ongoing fight against inflation.

Futures for the Dow Jones Industrial Average shed 50 points, or about 0.2%. Those for the S&P 500 and Nasdaq 100 were 0.2% and 0.3%, respectively.

The move in futures comes as investors will be focused on inflation this week. On Tuesday, the November consumer price index will be released, and traders will be looking for a sign that inflation is slowing.

The Federal Reserve has a two-day meeting starting the same day. The central bank is expected to announce another rate hike on Wednesday, though traders are anticipating a smaller move than in recent months.

In addition to the expected rate hike, the Fed’s updated economic projections and Chair Jerome Powell’s press conference could be key signals for what the central bank wants to do in the coming months.

“Financial conditions have eased dramatically since the October CPI reading released last month, so the Fed will likely use the December FOMC meeting to walk those back. …We think the markets are too sanguine on rates after the first quarter and we expect Powell to take a more hawkish tone and for the dots to indicate higher rates for a longer period of time than what is currently being priced in by the futures markets,” said Cliff Hodge, chief investment officer for Cornerstone Wealth.

Wall Street is coming off a rocky week that saw all three major averages lose ground. The Dow fell 2.77% for its worst week since September. The S&P 500 dropped 3.37%, while the Nasdaq Composite shed 3.99%.

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Business

What to know as record 8.7% Social Security COLA goes into effect

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Kathrin Ziegler | Digitalvision | Getty Images

As inflation has kept prices high in 2022, Social Security beneficiaries may look forward to a record high cost-of-living adjustment in 2023.

“Your Social Security benefits will increase by 8.7% in 2023 because of a rise in cost of living,” the Social Security Administration states in the annual statements it is currently sending to beneficiaries.

The 8.7% increase will be the highest in 40 years. It is also a significant bump from the 5.9% cost-of-living increase beneficiaries saw in 2022.

The increase is “kind of a double-edged sword,” according to Jim Blair, a former Social Security administrator and co-founder and lead consultant at Premier Social Security Consulting, which educates consumer and financial advisors on the program’s benefits.

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“It’s good for people on Social Security,” Blair said. “It’s not so good for the economy with inflation.”

Social Security benefit checks will reflect the increase starting in January.

The average retiree benefit will go up by $146 per month, to $1,827 in 2023 from $1,681 in 2022, according to the Social Security Administration The average disability benefit will increase by $119 per month, to $1,483 in 2023 from $1,364 in 2022.

What’s more, standard Medicare Part B premiums will go down by about 3% next year to $164.90, a $5.20 decrease from 2022. Medicare Part B covers outpatient medical care including doctors’ visits.

Monthly Part B premium payments are often deducted directly from Social Security checks. Due to the lower 2023 premiums, beneficiaries are poised to see more of the 8.7% increase in their monthly Social Security checks.

“The good news about these letters is people are realizing 100% of the 8.7% lift,” said David Freitag, a financial planning consultant and Social Security expert at MassMutual.

“Of course, the economy is inflated at a frightful rate, but this represents the value of cost-of-living adjusted benefits from Social Security,” Freitag said.

Few other income streams in retirement offer cost-of-living adjustments, he noted.

What to look for in your Social Security statement

Justin Paget | Digitalvision | Getty Images

If you’re wondering how much more you stand to see in your checks, the personalized letter from the Social Security Administration will give you a breakdown of what to expect.

That includes your new 2023 monthly benefit amount before deductions.

It will also tell you your 2023 monthly deduction for premiums for Medicare Part B, as well as Medicare Part D, which covers prescription drugs.

The statement will also show your deduction for voluntary tax withholding.

The good news about these letters is people are realizing 100% of the 8.7% lift.

David Freitag

financial planning consultant and Social Security expert at MassMutual

After those deductions, the statement shows how much will be deposited into your bank account in January.

Of note, you do not necessarily have to be receiving Social Security checks now to benefit from the record 2023 increase, Blair noted.

“The good news is you don’t have to apply for benefits to receive the cost-of-living adjustment,” Blair said. “You just have to be age 62 or older.”

When you may pay Medicare premium surcharges

If your income is above a certain amount, you may pay a surcharge called an income related monthly adjustment amount, or IRMAA, on Medicare Parts B and D.

This year, that will be determined by your 2021 tax returns, including your adjusted gross income and tax-exempt interest income. Those two amounts are added together to get your modified adjusted gross income, or MAGI.

In 2023, those IRMAA premium rates kick in if your modified adjusted gross income is $97,000.01 or higher and you filed your tax return as single, head of household, qualifying widow or widower or married filing separately; or $194,000.01 or higher if you are married and filed jointly.

Notably, just one dollar over could put you in a higher bracket.

“It’s important for everyone to make sure that the amount of adjusted gross income that they’re using for the IRMAA surcharges agrees with what they filed on their tax return two years ago,” Freitag said.

If the information does not match, you “absolutely need to file an appeal,” he said.

Because the IRMAA surcharges can be extremely significant, that is an area to watch for errors, Freitag said.

When to appeal your Medicare surcharges

If your income has gone down since your 2021 tax return, you can appeal your IRMAA.

That goes if you have been affected by a life changing event and your modified adjusted gross income has moved down a bracket or below the lowest amounts in the table.

Qualifying life changing events, according to the Social Security Administration, include marriage; divorce or annulment; death of a spouse; you or your spouse reduced your work hours or stopped working altogether; you or your spouse lost income on from property due to a disaster; you or your spouse experienced cessation, termination or reorganization of an employer’s pension plan; or you or your spouse received a settlement from an employer or former employer due to bankruptcy, closure or reorganization.

To report that change, beneficiaries need to fill out Form SSA-44 with appropriate documentation.

How higher benefits could cost you

Andrew Bret Wallis | The Image Bank | Getty Images

As your Social Security income goes up with the 8.7% COLA, that may also push your into a different IRMAA or tax bracket, Freitag noted.

That calls for careful monitoring of your income, he said.

Keep in mind that two years in the future you may get exposed to IRMAA issues if you’re not careful.

In addition, more of your Social Security benefits may be subject to income taxes. Up to 85% of Social Security income may be taxed based on a unique formula that also factors in other income.

It is a good idea to have taxes withheld from Social Security benefits in order to avoid a tax liability when you file your income tax returns, according to Marc Kiner, a CPA and co-founder of Premier Social Security Consulting.

“Do it as soon as you can,” Kiner said of filling out the voluntary withholding request form.

To better gauge how IRMAA or taxes on benefits may affect you going forward, it may help to consult a tax advisor or CPA who can help identify tax-efficient strategies, Freitag said.

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Business

Dow Jones Futures: Inflation Report, Federal Reserve Are Big Tests For Market Rally

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Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures, with attention squarely on the CPI inflation report and the Federal Reserve.




X



The stock market rally retreated last week with the major indexes continuing their trend of popping to new highs but then fading back. It’s a challenging environment for buying stocks.

This coming week investors get a one-two shot of big economic news. On Tuesday, the Labor Department will release its November CPI inflation report. On Wednesday afternoon, the Federal Reserve will hike rates yet again with Fed chief Jerome Powell offering signals about further tightening in early 2023.

That could be a catalyst for big market gains or losses, or choppy sideways actions could continue. Investors should likely wait for the inflation report and Fed news before adding exposure.

Breakout failures or fizzles are widespread, with DXCM stock tumbling back Friday after briefly clearing a buy point Thursday on FDA approval.

But here are five stocks to watch: Dow Jones giants Caterpillar (CAT) and Goldman Sachs (GS), Sanmina (SANM), McKesson (MCK) and MercadoLibre (MELI). To be clear, none of these stocks are actionable, with MELI stock in particular needing some work.

Microsoft (MSFT) is faring relatively well for the megacaps, with Apple (AAPL) below its 50-day line and Tesla (TSLA) trying to avoid setting new bear market lows. But MSFT stock remains well below its 200-day line and hasn’t made much progress over the past month.

The video embedded in the article reviewed the market action in depth and analyzed Dexcom (DXCM), MercadoLibre and CAT stock.

Economy, S&P 500 Face Hard Landing — Unless The Fed Does This

CPI Inflation And Fed Meeting

Early Tuesday, the Labor Department will release the November consumer price index. Overall and core CPI inflation rates should cool over the next several months, if only because comparisons are getting tougher. But services prices have been stubbornly strong.

The Federal Reserve wants to see more-substantial declines on services inflation, as well as wage gains, before halting rate hikes. At 2 p.m. ET, the Fed is expected to raise its fed funds rate by 50 basis points, to 4.25%-4.5%, ending a string of four 75-basis-point hikes. Investors will want some clues about the February meeting, and how high the fed funds rate may ultimate reach. Markets are currently pricing in another half-point Fed rate hike in February, though there’s a decent chance of a quarter-point move.

Fed chief Powell’s comments at 2:30 p.m. ET, along with the CPI inflation report, may set the tone on Fed policy heading into 2023.

Powell and several policymakers have signaled that a recession may be necessary to bring inflation under control.

Dow Jones Futures Today

Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Stock Market Rally

The stock market rally saw significant retreats for key indexes in the latest week.

The Dow Jones Industrial Average sank 2.8% in last week’s stock market trading. The S&P 500 index lost 3.4%. The Nasdaq composite tumbled 4%. The small-cap Russell 2000 plunged 5.1%.

The 10-year Treasury yield rose 6 basis points to 3.57%, rebounding from 3.4% midweek.

U.S. crude oil futures plunged 11% to $71.02 a barrel last week, with gasoline futures tumbling 9.8%. Both hit 2022 lows. Natural gas prices dipped 0.6%.

ETFs

Among key growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) slumped 4.6%, with Microsoft stock a major holding. The VanEck Vectors Semiconductor ETF (SMH) retreated 1.7%.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) tumbled 9.2% last week and ARK Genomics ETF (ARKG) 8.1%. TSLA stock is a massive holding across Ark Invest’s ETFs.

SPDR S&P Metals & Mining ETF (XME) gave up 6.4% last week. The Global X U.S. Infrastructure Development ETF (PAVE) fell back 2.85%. U.S. Global Jets ETF (JETS) descended 3.3%. SPDR S&P Homebuilders ETF (XHB) fell 2%. The Energy Select SPDR ETF (XLE) dived 8.45%, decisively breaking its 50-day line. The Financial Select SPDR ETF (XLF) retreated 3.9%. The Health Care Select Sector SPDR Fund (XLV) dropped 1.3% after climbing in eight of the prior nine weeks.

Five Best Chinese Stocks To Watch Now

Megacap Stocks

Apple stock fell 3.8% in the past week, tumbling below that key level Tuesday and hitting resistance there on Friday. Bad news on iPhone production might be priced in, and AAPL stock is rebounding.

Fellow Dow tech titan Microsoft stock also sank 3.8%, but held support at the 21-day line, modestly above a just-rising 50-day. But it’s well below the 200-day line. MSFT stock is essentially flat vs. a month ago, much like the S&P 500 and Nasdaq.

Tesla stock tumbled 8.1% in the latest week, even with Friday’s 3.2% pop. TSLA stock is jumping above recent bear market lows. Tesla announced new China incentives this past week with widespread media reports that the Shanghai plant will cut production significantly over the next few weeks, even halting Model Y output.

Tesla Vs. BYD: Which EV Giant Is The Better Buy?

Stocks To Watch

Caterpillar stock fell 3.7% to 227.29 last week, undercutting the 21-day line. The retreat could end up being a constructive shakeout. CAT stock has a buy point at 238 or 239.95 from a long cup base. In another week, the Dow heavy equipment giant could have a flat base with that 239.95 buy point. A slightly longer pause would let the fast-rising 50-day line narrow the gap with CAT stock.

Goldman stock slumped 5.6% in the latest week to 359.14, round-tripping a breakout from a cup base with a 358.72 buy point, before rising slightly above it. A solid bounce from here could offer a new entry, especially if the 50-day or 10-week line catch up. On a weekly chart GS stock has a 13-month cup-with-handle base, with a 389.68 buy point, according to MarketSmith analysis. The past week has now created more depth on that handle, which also could become a flat base in a week.

Sanmina stock slumped 7.3% to 62.48 this past week. SANM stock had been consolidating tightly in the profit-taking zone after an October breakout from a cup base. Shares could be starting a pullback to the 50-day/10-week line, offering a buying opportunity, though the weekly drop was abrupt. SANM stock also is working on a possible flat base.

McKesson stock fell 4% to 371.37 last week, dropping Friday to just below the 50-day and 10-week lines. MCK stock is working on a new consolidation after a sharp sell-off on Nov. 10-11 that slammed many defensive medical stocks. A move above the Dec. 2 high of 389.45 could offer an early entry, still close to moving averages.

MELI stock sank 5.1% to 896.48, its fourth straight weekly decline. The Latin American e-commerce and payments giant has a 1,095.44 buy point, with a trendline entry around 1,025. An aggressive entry could be a decisive retaking of MELI stock’s moving averages, with the Dec. 2 high of 957 as that trigger. While MercadoLibre stock has been trending lower, the weekly losses come on lighter volume with some relatively strong positive closes.

Market Rally Analysis

A week ago, the stock market rally was hitting new highs, with the S&P 500 above its 200-day line for the first time in months. But as investors re-evaluated the jobs report and Fed chief Powell’s comments, the major indexes retreated.

The S&P 500 fell below its 200-day line, while the Nasdaq tested its 50-day. Both hit resistance at the 21-day line late in the week. The Russell 2000 tumbled below its 200-day and 21-day lines and came right down to its 50-day, just undercutting its 10-week line.

The rally-leading Dow is holding support around its 21-day.

The S&P 500 is basically where it was after Nov. 10, when a tame October CPI inflation report buoyed stocks. The Nasdaq and Russell 2000 are back to those early November levels, but also late October peaks.

If you had to design a scenario to lure investors in to get roughed up repeatedly, this current uptrend might be the blueprint: A market rally of a few big one-day gains followed by pullbacks over several sessions.

It’s still a confirmed market rally. However, further losses, such as the Nasdaq or especially the S&P 500 clearly breaking their 50-day lines, would be worrisome.

Tuesday’s November CPI inflation report and Wednesday’s Fed meeting announcement and Powell’s comments could provide a catalyst for a sustained market rally, or a decisive sell-off. But they also could spur yet another big market pop that seems decisive, only to be followed by yet another pullback.

Time The Market With IBD’s ETF Market Strategy

What To Do Now

Investors should be wary of adding exposure until the CPI inflation report and Fed meeting are in the rearview mirror. Even if markets jump on the inflation data and Fed chief Powell’s comments, investors should be selective about new buys, in case the major indexes simply fall back over the next several sessions.

At some point a sustained, steady market rally will take hold. When that happens, buying opportunities will be plentiful.

So get your stock market holiday shopping list ready. A large number of stocks from a variety of sectors are setting up or close to doing so.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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Business

Market Rally Awaits CPI Inflation Report, Federal Reserve After Ugly Week; Here’s What To Do

Leave a comment

Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures, with attention squarely on the CPI inflation report and the Federal Reserve.




X



The stock market rally retreated last week with the major indexes continuing their trend of popping to new highs but then fading back. It’s a challenging environment for buying stocks.

This coming week investors get a one-two shot of big economic news. On Tuesday, the Labor Department will release its November CPI inflation report. On Wednesday afternoon, the Federal Reserve will hike rates yet again with Fed chief Jerome Powell offering signals about further tightening in early 2023.

That could be a catalyst for big market gains or losses, or choppy sideways actions could continue. Investors should likely wait for the inflation report and Fed news before adding exposure.

Breakout failures or fizzles are widespread, with DXCM stock tumbling back Friday after briefly clearing a buy point Thursday on FDA approval.

But here are five stocks to watch: Dow Jones giants Caterpillar (CAT) and Goldman Sachs (GS), Sanmina (SANM), McKesson (MCK) and MercadoLibre (MELI). To be clear, none of these stocks are actionable, with MELI stock in particular needing some work.

Microsoft (MSFT) is faring relatively well for the megacaps, with Apple (AAPL) below its 50-day line and Tesla (TSLA) trying to avoid setting new bear market lows. But MSFT stock remains well below its 200-day line and hasn’t made much progress over the past month.

The video embedded in the article reviewed the market action in depth and analyzed Dexcom (DXCM), MercadoLibre and CAT stock.

Fed May Ditch Its 2% Inflation Target — Or Economy, S&P 500 Face Hard Landing

CPI Inflation And Fed Meeting

Early Tuesday, the Labor Department will release the November consumer price index. Overall and core CPI inflation rates should cool over the next several months, if only because comparisons are getting tougher. But services prices have been stubbornly strong.

The Federal Reserve wants to see more-substantial declines on services inflation, as well as wage gains, before halting rate hikes. At 2 p.m. ET, the Fed is expected to raise its fed funds rate by 50 basis points, to 4.25%-4.5%, ending a string of four 75-basis-point hikes. Investors will want some clues about the February meeting, and how high the fed funds rate may ultimate reach. Markets are currently pricing in another half-point Fed rate hike in February, though there’s a decent chance of a quarter-point move.

Fed chief Powell’s comments at 2:30 p.m. ET, along with the CPI inflation report, may set the tone on Fed policy heading into 2023.

Powell and several policymakers have signaled that a recession may be necessary to bring inflation under control.

Dow Jones Futures Today

Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Stock Market Rally

The stock market rally saw significant retreats for key indexes in the latest week.

The Dow Jones Industrial Average sank 2.8% in last week’s stock market trading. The S&P 500 index lost 3.4%. The Nasdaq composite tumbled 4%. The small-cap Russell 2000 plunged 5%.

The 10-year Treasury yield rose 6 basis points to 3.57%, rebounding from 3.4% midweek.

U.S. crude oil futures plunged 11% to $71.02 a barrel last week, with gasoline futures tumbling 9.8%. Both hit 2022 lows. Natural gas prices dipped 0.6%.

ETFs

Among key growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) slumped 4.6%, with Microsoft stock a major holding. The VanEck Vectors Semiconductor ETF (SMH) retreated 1.7%.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) tumbled 9.2% last week and ARK Genomics ETF (ARKG) 8.1%. TSLA stock is a massive holding across Ark Invest’s ETFs.

SPDR S&P Metals & Mining ETF (XME) gave up 6.4% last week. The Global X U.S. Infrastructure Development ETF (PAVE) fell back 2.85%. U.S. Global Jets ETF (JETS) descended 3.3%. SPDR S&P Homebuilders ETF (XHB) fell 2%. The Energy Select SPDR ETF (XLE) dived 8.45%, decisively breaking its 50-day line. The Financial Select SPDR ETF (XLF) retreated 3.9%. The Health Care Select Sector SPDR Fund (XLV) dropped 1.3% after climbing in eight of the prior nine weeks.

Five Best Chinese Stocks To Watch Now

Megacap Stocks

Apple stock fell 3.8% in the past week, tumbling below that key level Tuesday and hitting resistance there on Friday. Bad news on iPhone production might be priced in, and AAPL stock is rebounding.

Fellow Dow tech titan Microsoft stock also sank 3.8%, but held support at the 21-day line, modestly above a just-rising 50-day. But it’s well below the 200-day line. MSFT stock is essentially flat vs. a month ago, much like the S&P 500 and Nasdaq.

Tesla stock tumbled 8.1% in the latest week, even with Friday’s 3.2% pop. TSLA stock is jumping above recent bear market lows. Tesla announced new China incentives this past week with widespread media reports that the Shanghai plant will cut production significantly over the next few weeks, even halting Model Y output.

Tesla Vs. BYD: Which EV Giant Is The Better Buy?

Stocks To Watch

Caterpillar stock fell 3.7% to 227.29 last week, undercutting the 21-day line. The retreat could end up being a constructive shakeout. CAT stock has a buy point at 238 or 239.95 from a long cup base. In another week, the Dow heavy equipment giant could have a flat base with that 239.95 buy point. A slightly longer pause would let the fast-rising 50-day line narrow the gap with CAT stock.

Goldman stock slumped 5.6% in the latest week to 359.14, round-tripping a breakout from a cup base with a 358.72 buy point, before rising slightly above it. A solid bounce from here could offer a new entry, especially if the 50-day or 10-week line catch up. On a weekly chart GS stock has a 13-month cup-with-handle base, with a 389.68 buy point, according to MarketSmith analysis. The past week has now created more depth on that handle, which also could become a flat base in a week.

Sanmina stock slumped 7.3% to 62.48 this past week. SANM stock had been consolidating tightly in the profit-taking zone after an October breakout from a cup base. Shares could be starting a pullback to the 50-day/10-week line, offering a buying opportunity, though the weekly drop was abrupt. SANM stock also is working on a possible flat base.

McKesson stock fell 4% to 371.37 last week, dropping Friday to just below the 50-day and 10-week lines. MCK stock is working on a new consolidation after a sharp sell-off on Nov. 10-11 that slammed many defensive medical stocks. A move above the Dec. 2 high of 389.45 could offer an early entry, still close to moving averages.

MELI stock sank 5.1% to 896.48, its fourth straight weekly decline. The Latin American e-commerce and payments giant has a 1,095.44 buy point, with a trendline entry around 1,025. An aggressive entry could be a decisive retaking of MELI stock’s moving averages, with the Dec. 2 high of 957 as that trigger. While MercadoLibre stock has been trending lower, the weekly losses come on lighter volume with some relatively strong positive closes.

Market Rally Analysis

A week ago, the stock market rally was hitting new highs, with the S&P 500 above its 200-day line for the first time in months. But as investors re-evaluated the jobs report and Fed chief Powell’s comments, the major indexes retreated.

The S&P 500 fell below its 200-day line, while the Nasdaq tested its 50-day. Both hit resistance at the 21-day line late in the week. The Russell 2000 tumbled below its 200-day and 21-day lines and came right down to its 50-day, just undercutting its 10-week line.

The rally-leading Dow is holding support around its 21-day.

The S&P 500 is basically where it was after Nov. 10, when a tame October CPI inflation report buoyed stocks. The Nasdaq and Russell 2000 are back to those early November levels, but also late October peaks.

If you had to design a scenario to lure investors in to get roughed up repeatedly, this current uptrend might be the blueprint: A market rally of a few big one-day gains followed by pullbacks over several sessions.

It’s still a confirmed market rally. However, further losses, such as the Nasdaq or especially the S&P 500 clearly breaking their 50-day lines, would be worrisome.

Tuesday’s November CPI inflation report and Wednesday’s Fed meeting announcement and Powell’s comments could provide a catalyst for a sustained market rally, or a decisive sell-off. But they also could spur yet another big market pop that seems decisive, only to be followed by yet another pullback or bounce.

Time The Market With IBD’s ETF Market Strategy

What To Do Now

Investors should be wary of adding exposure until the CPI inflation report and Fed meeting are in the rearview mirror. Even if markets jump on the inflation data and Fed chief Powell’s comments, investors should be selective about new buys, in case the major indexes simply fall back over the next several sessions.

At some point a sustained, steady market rally will take hold. When that happens, buying opportunities will be plentiful.

So get your stock market holiday shopping list ready. A large number of stocks from a variety of sectors are setting up or close to doing so.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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Business

Key inflation measure shows price pressures cooled off in November, but remain high

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New York
CNN
 — 

Another key inflation measure shows price pressures cooled off but remained stubbornly high in November, despite the Federal Reserve’s monthslong efforts to fight inflation through higher interest rates.

The Producer Price Index, which measures prices paid for goods and services by businesses before they reach consumers, rose 7.4% in November compared to a year earlier, the Bureau of Labor Statistics reported Friday. That’s down from the revised 8.1% gain reported for October.

US stocks fell immediately after the report, as economists surveyed by Refinitiv had expected wholesales prices to have risen just 7.2%, annually. The higher-than-expected inflation readings raised concerns about whether the Fed will be able to slow the pace of rate hikes.

But futures for the Fed funds rate still show a strong likelihood of a half-point increase at the central bank’s policymaking meeting next week, rather than the three-quarter point hike instituted at the last four meetings.

The PPI report generally gets less attention that the corresponding Consumer Price Index, which measures prices paid by US consumers for goods and services. But this is a rare month in which the PPI report came out before the CPI report, which is due out Tuesday.

That and the Fed meeting scheduled for Tuesday and Wednesday next week is making this inflation report of particular importance to investors.

“Next Tuesday’s CPI release will be more important than today’s data, but with traders on edge, any indication that prices remain elevated and that inflation is more sticky than currently believed is a negative for markets,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

Overall prices rose a seasonally adjusted 0.3% compared to October — the same monthly increase as was reported in both September and October — but were slightly higher than the 0.2% rise forecast by economists.

Stripping out volatile food and energy prices, core PPI rose 6.2% for the year ending in November, down from the revised 6.8% increase the previous month. Economists had forecast only a 5.9% increase.

Core PPI posted a 0.4% increase from October, a far bigger rise than the revised 0.1% month-over-month rise in that previous month, and twice as big as the 0.2% rise forecast by economists.

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Business

China’s producer prices fall, consumer inflation slows on soft demand

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  • PPI falls for a second month
  • Nov PPI -1.3% y/y vs -1.3% y/y in October
  • Nov CPI +1.6% y/y vs +2.1% y/y in October

BEIJING, Dec 9 (Reuters) – China’s factory-gate prices showed an annual fall for a second month in November while consumer inflation slowed, indicating weak activity and soft demand in an economy that has been held back by tough pandemic controls.

Analysts said they expected the government to keep interest rates low and take measures to boost confidence.

The producer price index (PPI) was down 1.3% on a year earlier, unchanged from an annual contraction seen in October, according to National Bureau of Statistics (NBS) data issued on Friday. That was slower than a 1.4% fall tipped in a Reuters poll.

The November consumer price index (CPI) rose at its slowest pace in eight months, climbing 1.6% from a year earlier, which was less than the 2.1% annual rise seen in October but in line with a Reuters poll.

“These data suggest the economic momentum (continues) to weaken,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

A high-level political meeting on Tuesday, a gathering of the ruling Communist Party’s Politburo, emphasised that in 2023 the government would focus on stabilising growth, promoting domestic demand and opening up to the outside world.

Zhang said that, although the government had eased pandemic controls over the past week, it would take further measures to spur the economy.

“The Politburo meeting … identified weak confidence as a major problem for the economy,” he said. “I expect the government will do more to boost market and household confidence. The fast pace of reopening indicates the government’s sense of urgency.”

Growth in the world’s second-largest economy has sagged this year, largely impacted by the uncompromising COVID-19 curbs as global demand has also wavered.

The producer price deflation and milder consumer price inflation of November accompanied record COVID-19 infections and related curbs that disrupted production and curbed mobility.

Although markets have cheered the shift in pandemic policy, economists say it will likely depress growth over the next few months as infections surge, bringing an economic rebound only later in 2023.

Reuters Graphics

Producer deflation was led by the steel industry, in which prices were down 18.7%.

Part of the explanation for slower growth in consumer prices was in food markets.

Food prices were up 3.7% on a year earlier, whereas the rise seen in October was 7.0%. Within the food category, pork was a factor behind moderating inflation: it was 34.4% pricier in November than in the same month last year, but in October the annual rise had been 51.8%.

Underlying core annual inflation, which excludes volatile food and energy prices, was just 0.6% in November, unchanged from October

“The overall inflation pressure remains benign in China, and we expect the CPI inflation will be around 1.6% for 2023, down from 2.0% in 2022. Given this, the monetary policy will remain accommodative over the coming year,” said Hao Zhou, chief economist at Guotai Junan Group.

China’s central bank has kept its benchmark one-year loan prime rate at 3.65% since August. It expects consumer inflation to remain moderate next year.

Reporting by Liangping Gao and Liz Lee; Editing by Edmund Klamann and Bradley Perrett

Our Standards: The Thomson Reuters Trust Principles.

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World

Hong Kong stocks briefly notch 2%; China reports inflation data in line with expectations

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Hong Kong movers: Property, tech stocks rise on reopening optimism

CNBC Pro: Wall Street says a recession is coming. One investment pro names her favorite stocks to tough it out

Wall Street pros are increasingly sounding the alarm on a looming recession.

As economic growth slows and inflation stays higher for longer, how should investors position? Veteran investor Nancy Tengler shares her favorite dividend stocks with CNBC.

Pro subscribers can read more here.

— Zavier Ong

There’s confusion, optimism over China’s shift away from zero-Covid: British Chamber of Commerce

Beijing’s “U-turn” on Covid policies is leading to both confusion and optimism, said Steven Lynch, managing director at the British Chamber of Commerce in China.

“There’s a lot of optimism and hope for 2023, but there is huge amounts of confusion,” he told CNBC’s “Squawk Box Asia,” describing the departure from strict Covid rules as happening “almost overnight.”

He said there may still be “enormous inconsistencies” between local policies and the central government’s rules, and people remain concerned about falling sick.

“One thing is very clear Covid is now here. Covid is pretty rife here in Beijing. And I think that brings a whole new set of challenges to what’s going to face China,” he said.

— Abigail Ng

Credit Suisse says inflation is still not a problem in China

China’s inflation is likely to stay below 3% in the next 12 to 18 months, and the central bank is comfortable with this range, according to Jack Siu, Greater China chief investment officer at Credit Suisse.

“We don’t think CPI is an issue in China, in fact, it’s going to be remaining steady within this range of 1% to 3% in the foreseeable future,” he told CNBC’s “Street Signs Asia.” Inflation soared in many economies, but consumer prices in China remained moderate due to weak demand.

But China is likely to see “a resurgence in consumer activity” in the coming six months as people get used to living with the virus after some back and forth in the reopening of the economy, Siu said.

“In the second quarter, we expect the GDP to rally to 6.1% — partly it’s base effects, partly because people are living more normally,” he said.

— Abigail Ng

China’s producer prices fell in November, while consumer prices rose

China’s producer price index fell 1.3% in November compared to a year ago, extending its decline after shedding 1.3% in October, and slightly beating estimates for a 1.4% contraction in a Reuters poll.

The nation’s consumer price index rose 1.6% in November on an annualized basis, in line with expectations and easing from October’s reading of 2.1%.

The onshore and offshore Chinese yuan strengthened, and were around 6.94 per dollar shortly after the economic data releases.

— Lee Ying Shan

CNBC Pro: These 4 global consumer tech stocks are set to win on China reopening, HSBC says

Some global consumer tech companies could gain as China relaxes some Covid-19 restrictions, and shares of four firms could rise by more than 40%, according to HSBC.

The Asia-focused bank said a faster-than-expected recovery of consumer electronics in the coming months would benefit these companies.

CNBC Pro subscribers can read more here.

— Ganesh Rao

South Korea posts smaller current account surplus for October

South Korea registered a current account surplus of $880 million in October, a decline from September’s $1.6 billion.

Direct investment assets in South Korea increased by $2.75 billion, compared to $4.74 billion a month ago. Direct investment liabilities increased from $430 million to $810 million.

South Korea has been posting a current account surplus for the year, except for the months of July and August. A current account surplus indicates that a country sells more to the world than it buys from outside its borders.

— Lee Ying Shan

Stocks finish higher, S&P 500 breaks 5-day losing streak

Stocks closed higher, with the S&P 500 snapping its longest losing streak since October.

The S&P added 0.75% to finish at 3,963.51. The Dow Jones Industrial Average gained 183.56 points, or 0.55%, to settle at 33,781.48, while the Nasdaq Composite rallied 1.13% to end at 11,082.00.

— Samantha Subin

Interest on 30-year fixed rate mortgages falls

The cost of financing a home has ticked lower for a fourth consecutive week, according to Freddie Mac.

The weekly average rate on a 30-year mortgage is now 6.33%, down from 6.49% last week. Over the past month, the interest rate on these loans has come down about 75 basis points: On Nov. 10, the average rate on a fixed 30-year mortgage was 7.08%.

Even with the decline in the short term, the cost of financing a home loan is up significantly from a year ago. Last year at this time, the rate on a 30-year mortgage averaged 3.1%.

Despite the decline in rates, demand for home loans continues to decline. Mortgage application volume slid 1.9% last week, compared to the week before that, according to the Mortgage Bankers Association.

— Darla Mercado, Diana Olick

Part of the yield curve is now most inverted since 2001

The inversion of the 3-month and 10-year Treasury yield curve is now the deepest since January 2001 at nearly 90 basis points, according to CNBC data. The short end of the curve soared to 4.30% from just 0.05% at the beginning of the year as traders priced in higher interest rates.

The yield curve inverts when shorter-term Treasury rates rise above longer-term yields. Many economists view the 2-year 10-year part of the yield curve as more predictive of a potential recession.

Cathie Wood pointed to that part of the yield curve, which is the most inverted since the early 1980s. The popular investor said the bond market is signaling that the Federal Reserve is making a “serious mistake” with its jumbo rate hikes.

— Yun Li

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