Inflation Grew In December | Daily Market Update

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Wednesday, January 13, 2021

Top Story

Consumer prices in line with forecasts

Consumer inflation for December, based on the Consumer Price Index (CPI), grew 0.4% month over month, buoyed by higher gasoline prices. Core inflation, excluding food and energy prices, grew 0.1% month over month, a slowing pace from the prior month. At an annual rate of 1.6% for core inflation we would not expect inflation to become worrisome for stock or bond investors for quite some time.

Daily Insights

US stocks opened little changed this morning

  • European equities are little changed with France outperforming at midday.
  • Asian markets were mixed with Japan’s Nikkei 225 continuing to lead the pack.
  • WTI crude oil prices rise for the seventh straight day, its longest streak since 2019.

Small business optimism sinks to 6-month low

The December release of the NFIB Small Business Optimism Index dropped to a 6-month low and below the long term average since 1973. Holiday-season growth in COVID-19 cases and political uncertainty pressure small business sentiment. We take a deeper look at small businesses in today’s LPL Research blog.

MLK Jr. Day observed January 18

LPL Financial along with the stock and bond markets will be closed Monday, January 18, in observance of Martin Luther King, Jr. Day. There will not be a LPL Research blog on Monday.

Technical update

The S&P 500 Index’s flat return on Tuesday hid sharply divergent sector performance. The energy sector gained 3.5%, moving to its highest level since June, while communication services fell 1.5%. The Russell 2000 Index made yet another record high.

COVID-19 news

The United States reported 216,000 new COVID-19 cases Tuesday as the post-holiday surge may be peaking (source: Johns Hopkins).

  • Hospitalizations continue to rise, but the rate of increase appears to be slowing.
  • New cases in Western Europe are being driven by record cases in Spain.
  • Decline in cases in the United Kingdom suggests the new variant can be tamed (source: COVID Tracking Project).

 What 2021 Policies Could Mean for Your Investments

In this week’s Market Signals podcast and video, LPL Research talks about 2021 policy updates and the possibilities of higher taxes and more regulation, more stimulus, higher Treasury yields, and better stock performance in 2021.

 

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