Testing new highs. The S&P 500 Index closed 0.5% away from a record-high close yesterday, and the index is poised to test new highs in today’s trading. Recent gains in equities have been led by cyclicals, a trend that we’ve been watching as a sign of underlying strength in market breadth. We’d like to see the Russell 2000 Index of small cap stocks participate more in gains to feel more confident about the durability of this recent rally. We’re specifically watching for that benchmark to eclipse 1,600, a level about 1.6% away.
Retail sales rise. Retail sales rose for a sixth straight month in August, the longest streak since the end of 2017, as a solid labor market and rising personal incomes continued to propel consumer spending. Consumer spending has been one of the most encouraging economic trends lately, and the economic outlook has been unusually dependent on the strength of the U.S. consumer amid a stall in business spending. We’re still watching for corporate spending to rebound, but we don’t expect this to happen until we see progress in the U.S.-China trade dispute.
A new high in CPI growth. Consumer inflation has accelerated recently, bucking disinflation and deflation concerns that had permeated financial markets earlier this year. In August, the core Consumer Price Index (CPI) rose 2.4% year over year, one of the fastest paces of growth in this economic cycle. Core CPI also increased at least 0.3% for a third straight month, the first time that’s happened since April 1995. On the LPL Research blog today, we’ll explain the drivers behind this unusually strong CPI report and analyze what this could mean for the Federal Reserve’s plans.
Friday the 13th. Today is the first Friday the 13th since July 2018. For most people, this is just another day, but equity investors may be in need of good luck. Fortunately, the S&P 500 has done pretty well when a Friday the 13th takes place in September. Check out our LPL Research blog post, published yesterday, for more insights on this particular Friday the 13th.
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