The market may not have ended last week’s action on a high note, but it doesn’t really matter. The first three days of the week were so strong, stocks were still more than able to log a second big week of gains and further solidify the young turnaround effort.
There’s still a huge hurdle dead ahead though.
We’ll weigh the pros and cons below, as always. First, however, let’s recap last week’s economic news (there was a biggie) and preview this week’s economic announcements.
Economic Data
Last week’s biggest news ended up being a non-event, yet it was telling economic news all the same. On Thursday, as expected, the FOMC opted to not raise interest rates by a quarter point. The Fed did say the bigger-picture rate hike plan is still intact, and the odds say they’ll be bumped higher next month.
Maybe the Federal Reserve should have pulled the trigger though. We learned on Friday that producers’ input prices perked up much more last month than anticipated. The nation’s factories and plants said their materials costs were up 0.6% for the month, compared to September’s costs, and up 0.5% on a core basis. Economists were only modeling producer inflation of 0.2%. Annualized, core producer price inflation now stands at 2.8%.
Producer, Consumer Inflation Charts
Source: Thomson Reuters
On Tuesday of this week we’ll round out the inflation picture with last month’s consumer inflation report. The pros are calling for a fairly muted increase there, though in light of the fact that producers paid higher prices than they expected to last month, consumer inflation will likely roll in higher than expected too.
Regardless, notice that with higher year-over-year comps, annual inflation rates are leveling off and even sliding lower.
Also last week we rounded out the ISM data, with the services side of the information being updated on Monday. It fell a little, but was still better than expected. Both measures remain above the critical level.
