- Global stocks mixed as Fed decision looms. (10:26am ET) The S&P 500 is moving higher this morning as traders await this afternoon’s policy announcement from the Federal Reserve, with an interest rate hike all but a foregone conclusion, and digest a spat of economic data including consumer prices and retail sales. Yesterday saw major indexes slip as the S&P 500 lost 0.3%; 10 of 11 sectors finished lower, led down by energy (-1.1%) and industrials (-0.9%). Overseas markets are mixed as equities in Asia were mostly lower, the Nikkei and Hang Seng both shed 0.2%, though the Shanghai Composite ticked up 0.1%. Meanwhile, European stocks are up in midday trading, led by basic resources and oil stocks on the back of a rebound in WTI crude oil ($48.53/barrel) prices. Lastly, COMEX gold ($1199/oz.) continues to inch lower, and Treasury yields are down 2 basis points (0.02%) to 2.58%.
- Headline and core CPI above Fed’s 2% target, but for how long? The Consumer Price Index (CPI) posted a 2.7% year-over-year increase in February 2017, matching expectations, and accelerating from January (+2.5%). Core CPI (excludes food and energy) rose 2.2% from a year ago, matching expectations, and decelerating from January (+2.3%). Both readings are above the Fed’s 2% target, and help to cement the Fed’s likely 0.25% hike at today’s FOMC meeting. The headline reading has been boosted by a 15.2% year-over-year increase in energy prices, as we reached the anniversary of the January/February 2016 oil price lows of under $30 per barrel. While core CPI is likely to continue to drift higher, headline CPI is likely to level off and decelerate over the second half of 2017 assuming oil prices stay in the $50 per barrel range.
- Q1 GDP estimates may rise on retail sales. February retail sales were largely in line, but solid upward revisions to January data will likely push up Q1 GDP estimates. Retail sales, as reported by the Department of Commerce each month, are a timely but not very comprehensive (retail sales are well under 20% of total consumer spending) look into the consumer. In February, overall sales rose 0.1% from January, matching expectations. However, January’s reading-initially reported as a 0.4% gain-was revised up to show a 0.6% increase. Core retail sales (excluding autos, building materials, and gasoline) also rose 0.1% in February, but the January reading was revised substantially higher from 0.4% to 0.8%. Core retail sales feed directly into the nondurable consumer goods portion of consumer spending.
- Crude bounce. Crude is up after falling the previous seven days and 10 of the past 11. Record output in the U.S. has been cited as one reason for the weakness. Crude oil closed beneath its 200-day moving average on very high volume earlier this week. The 200-day moving average served as support on pullbacks in August and again in November. Will the third time be a charm again?
- March bounce? We’ve noted before that March is the best-performing month for the S&P 500 the past 10 years, but what is interesting is most of those gains take place the second half of the month. Today on the LPL Research blog we will take a closer look at the positive seasonals in mid March and also list some of our favorite sector plays.
- Empire State Mfg. Report (Mar)
- CPI (Mar)
- Retail Sales (Mar)
- FOMC Decision (Rate Hike Expected)
- FOMC Economic Forecasts and “Dot Plots”
- Yellen Press Conference
- General Election in the Netherlands
- China’s Premier Li Holds Annual Press Conference
- Philadelphia Fed Mfg. Report (Mar)
- US Debt Ceiling Reinstated
- President Trump to Release His FY 2018 Budget
- UK: Bank of England Meeting (No Change Expected)
- Japan: Bank of Japan Meeting (No Change Expected)
- Index of Leading Indicators (Feb)
- G20 Finance Ministers Meeting in Germany