The first wman Jerome Powell’s speech helped to calm jittery investors. All three of the major indices closed higher. The S&P 500 (^GSPC) ended the week up 1.86%, while the Dow (^DJI) rose 1.61%, and the Nasdaq (^IXIC) jumped 2.34%.
Powell’s comments on Friday that the Fed is not on a fixed path to hike rates calmed investors. At a conference in Atlanta, Powell said, “With the muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves.”
On the heels of a monster jobs report, investors will turn their attention to the Consumer Price Index (CPI) data released on Friday, January 11. The Fed often looks to CPI data as a key inflation gauge. Economists polled by Bloomberg are expecting “core” consumer prices excluding the cost of food and gas to have risen 2.2% in December from a year ago. The Fed is targeting 2% inflation.
“Given that the FOMC focuses on core inflation in its near-term policy deliberations, a downside miss on the headline is unlikely to ring alarm bells if driven by drops in energy and/or food. An increase in core CPI of 0.1-0.2% would be consistent with the recent trend,” Wells Fargo wrote in a note on Friday.
On Wednesday, the Federal Open Market Committee (FOMC) minutes will be released. On Thursday, Powell will speak from the Economic Club of Washington D.C. at noon ET, and Fed Vice Chairman Rich Clarida will be speaking at the Economic Outlook and Monetary Policy at the Money Marketeers of New York University at 7 p.m. ET.
Market watchers will also be focusing on trade talks that are scheduled to take place on Monday January 7- Tuesday January 8 in Beijing. While President Trump and President Xi Jinping will not be meeting in person, Deputy U.S. Trade Representative Jeffrey Gerrish will be meeting with his Chinese counterparts. This will be the first in-person meeting between the two nations since the G20 summit in Argentina in early December.
Additionally, the Superbowl of consumer electronics, CES 2019, kicks off on Tuesday, January 8 for a four-day event in Las Vegas. Some of the brightest minds in tech will be speaking and the newest gadgets and tech will be displayed.
Monday: Factory orders and durable goods data will be postponed due to the government shutdown. ISM Non-Manufacturing Index, December (59.0 expected, 60.7 prior)
Tuesday: NFIB Small Business Optimism, December (103.0 expected, 104.8 prior); Trade Balance, November (-$54.0 billion expected, -$55.5 billion prior); JOLTS Job Openings, November (7079 prior)
Wednesday: MBA Mortgage Applications, week ending January 4 (-8.5% prior)
Thursday: Initial Jobless Claims, week ending January 5 (225,000 expected, 231,000 prior); Continuing Claims, week ending December 29 (1.70 million expected, 1.74 million prior); Bloomberg Consumer Comfort, week ending January 6 (59.6 prior); Wholesale Inventories month-on-month, November (+0.5% expected)
Friday: Consumer Price Index (CPI) month-on-month, December (-0.1% expected, 0.0% prior); CPI ex food and energy month-on-month, December (+0.2% expected, +0.2% prior); CPI year-on-year, December (+1.9% expected, +2.2% prior); CPI ex food and energy year-on-year, December (+2.2% expected, +2.2% prior); Monthly Budget Statement, December ($0.0 billion expected, -$204.9 billion prior)