Lagging CPI Defines Wall Street Open

This morning’s Wall Street open has turned relatively positive. For the first half-hour of trade, the DJIA DOW (+150), S&P 500 SPX (+16), and NASDAQ (+50) have reversed opening losses. Traders are pricing in the lagging U.S. CPI numbers released during the pre-market hours and the likelihood of more FED easing.

Sub-par inflation has been a prominent concern throughout 2019. Due to meet on 30 October, the FED is coming off two consecutive ¼ point rate cuts; is Jerome Powell and the FOMC preparing for another ¼ point reduction in the Federal Funds Rate?

The odds of a late-October cut are growing more probable by the day. Today’s CPI numbers have given the FED even more supporting evidence:

Event                                                  Actual        Projected   Previous

CPI (MoM, Sept)                                  0.0%              0.1%             0.1%

CPI (YoY, Sept)                                     1.7%              1.8%             1.7%

Core CPI (MoM, Sept)                          0.1%              0.2%             0.3%

Core CPI (YoY, Sept)                             2.4%               2.4%            2.4%

In total, today’s figures have disappointed Wall Street expectations. Perhaps the only saving grace is Core CPI holding firm on a yearly basis. This is fair news, even though the intermediate-term inflationary downtrend remains intact.

A Muted Wall Street Open For U.S. Stocks

The December E-mini S&P 500 is showing signs of life after a negative overnight session. At this point, it appears that traders are excited about an abundance of cheap money hitting the streets in Q4 2019.

Here are two resistance levels to watch in this market as the session progresses:

• Resistance(1): Bollinger MP, 2945.25
• Resistance(2): Daily SMA, 2993.00

Overview: It has been a tight week for equities as traders have dealt with a collection of uncertainties. However, one thing is for sure: low inflation is a problem and one that will be addressed by the FED. As the odds of another rate cut grow, be on the lookout for the S&P 500 to revisit the 3000.00 handle.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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