The past week offered a number of data points that offered market participants some level of clarity about the future. Of course, what that clarity may be certainly differs depending on what your interpretation of the data is and whether you happen to be a FOMC voting member.
On Tuesday, inflation data for the previous month came out, which was met with a sigh of relief from Wall Street. Annually, the inflation rate stands at 2.7 percent. For the month, Core CPI increased .3 percent while overall CPI increased by .2 percent. The figures were in line with expectations.
The fact that inflation met expectations raised the likelihood of a rate cut in September. It also raised the likelihood of rate cuts taking place in October and December. This was because the relatively calm number was taken as a sign that tariffs weren’t going to do much to reignite inflation. Ultimately, the Fed could now confidently take the data at face value and adjust monetary policy accordingly.
On Thursday, the Price Producers Index (PPI) came out, and it found that prices rose much higher than expected in July. In July, both Core PPI and overall PPI were up by .9 percent compared to an anticipated increase of .2 percent. The result caused some to rethink the idea that a rate cut could happen in September, however, the odds are still in favor of that happening.
Also on Thursday, it was revealed that 224,000 people filed for unemployment benefits over the past week. This was roughly the number expected prior to the report’s release that morning.
On Friday, retail sales data was released, and it found that core retail sales were up .3 percent while overall sales were up .5 percent. Core retail sales were in line with expectations while overall sales were expected to rise .6 percent. In addition, the University of Michigan released its consumer sentiment and inflation expectation reports. Consumer sentiment came in at 58.6 compared to an expected 61.9 while inflation expectations were 4.9 percent.
The S&P 500 closed up 60 points this week to finish at 6,449. This represents a gain of .95 percent for the index that is again flirting with new all-time highs. The market made its low of the week on Monday afternoon when it dipped to 6,366. On Wednesday morning, the index made its weekly high at 6,472 before going into a trading range for the following three days.
As with the S&P, the Dow was up this week having gained 736 points to close at 44,946. This was a gain of 1.66 percent for the index that is now up 1.45 percent since August 1st. For the week, the index made its low on Monday afternoon when it dipped to 43,971. On Friday morning, it made its high of the week at 45,084 before reversing slightly to close out the day.
The Nasdaq was up .49 percent this week to close at 23,712, which was a gain of 116 points. The index is up over 4 percent over the past month and is up 21.55 percent since this time last year. This week, the index made a low of 23,489 on Monday morning and a high of 23,949 on Wednesday morning.
International traders were likely interested to hear that the Royal Bank of Australia (RBA) cut rates by 25 basis points on Tuesday morning. The RBA cited decreasing inflation as the reason for the cut, and it says that the economic outlook for the rest of the year is rather soft. Great Britain announced on Thursday morning that GDP was up .4 percent over the past month, which beat estimates of a .2 percent increase.
The upcoming week will surely be another interesting one as Fed meeting minutes are scheduled for release on Wednesday afternoon. Flash Services PMI and Flash Manufacturing PMI reports are also due out, while the Jackson Hole Symposium takes place on Thursday and Friday.