Stock Market Expected to Climb after Better Than Expected CPI
Stocks are incredibly high right now and should continue to be so thanks to positive CPI data and peaceful trade agreements.
Quick overview
- A bullish week is anticipated for the stock market due to new trade deals between the U.S. and several Asian countries.
- President Trump announced tariff agreements with Malaysia, Thailand, Vietnam, and Cambodia, which could boost market performance.
- The Consumer Price Index report showed lower-than-expected inflation, leading analysts to predict a potential interest rate cut from the Federal Reserve.
- Despite concerns of a stock market bubble, the indices remain elevated, indicating a thriving economy supported by stable inflation data.
Ahead of the stock market opening on Monday, we anticipate a bullish week thanks to trade deals between the U.S. and several Asian countries and a promising Consumer Price Index (CPI) report.
President Donald Trump travelled to Asia on Friday after cutting trade negotiations with Canada. He announced new tariff deals with Malaysia, Thailand, Vietnam, and Cambodia. Those deals could give the stock market a boost even after the market indices ended on a high note on Friday.
The market could receive another boost as it opens thanks to Friday’s Consumer Price Index report. That data showed better than expected consumer prices, leading several analysts to predict a new interest rate cut from the Federal Reserve, perhaps as early as this week.
CPI and the State of the Stock Market
The CPI report showed that prices rose in September but at a rate that was lower than expected. Inflation climbed to 3.0% (up from 2.9%) in September, which was also lower than expected. Consumer prices rose just 0.3%. Core CPI, which excludes food and energy, rose 0.2% for September.
Most data compilation reports have been suspended during the ongoing government shutdown, but the Bureau of Labor Statistics made the effort to release this report now since the Social Security Administration uses that information to adjust cost-of-living benefit checks.
The stock market is still residing near all-time highs. Over the last week, the Nasdaq Composite gained overall, and it is currently at a record high above 23,200. The Dow Jones is likewise elevated, having made upward progress last week despite a mid-week dip. At 47,200 points, this index is at its all-time high as well.
Rounding out the top three is the S&P 500, which has benefited from tremendous performances from pharmaceutical and technology stocks. Like the other two indices, this index rose last week and is holding at a record high above 6,700.
Elevated stock market indices are indications that the economy is thriving, but there is concern that we may be in a stock market bubble that is preparing to burst. However, as long as CPI reports and other economic data show that inflation is not advancing very much and is better than expected, the markets should remain relatively stable. With Trump securing peaceful trade negotiations with a number of trade partners, the stock market and the overall economy should remain relatively elevated and should not be in serious danger of plummeting sharply.
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