The major averages rallied back this week, with the S & P 500 closing 1.8% higher, the Dow Jones Industrial edging up 0.3% and the tech-heavy Nasdaq advancing more than 3% on the week. The gains came despite a slightly hotter-than-expected consumer price index release on Thursday. The headline index came in at 3.4% versus 3.2% expected, and the core index registered a 3.9% year-over-year advance versus expectations for a 3.8% rise. As noted in our analysis , we aren’t overly concerned because at the core index level — which strips out volatile food and energy prices and is the Federal Reserve’s preferred measure of inflation — the trend continues to be disinflation. In addition, we are also seeing continued disinflation in the shelter index, the largest pain point on inflation, exerting upward pressure on prices. On Friday, the producer price index came in below expectations, potentially signaling further CPI disinflation in the months to come. Rises in the PPI can eventually lead to increases in CPI as companies look to pass through higher costs. Finally, we kicked off fourth-quarter earnings season. Club name Wells Fargo reported on Friday and though the results were a bit noisy , we found them to be better-than-expected once adjusting for one-time expense items. Still, shares of Wells Fargo were down more than 3% as the bank warned net interest income (NII) for 2024 may come in lower year over year. Next week brings a couple key economic updates along with a ramp up of earnings releases. Within the Club, we’ll hear from Morgan Stanley on Tuesday before the opening bell. Markets are closed Monday for Martin Luther King Jr. Day. 1. Consumer health. Economists are expecting to see a seasonally adjusted 0.4% monthly advance for December retail sales, released on Wednesday. The report doesn’t carry as much weight as the CPI or personal spending reports, but it will give some more detail on how the consumer is holding up and where she is spending. It’s…
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