Stock indexes rose Monday, reversing much of last week's declines. The move comes ahead of an inflation report arriving Tuesday morning.
The Bureau of Labor Statistics released January consumer price index data at 8:30 am ET today. The consensus forecast among economists is that the CPI rose by 0.5% in January, driven by a surge in energy costs. Gasoline prices had fallen sharply in November and December but have increased substantially so far in 2023.
Federal Reserve officials will be more interested in the core CPI, which excludes the more volatile food and energy components of the index. That's expected to have risen 0.4% for the second-straight month. There will be a strong focus on the wage-driven services components of the core CPI following January's red-hot jobs report.
The Fed's decisions and expectations of its next moves have driven stock and bond markets for the past year, pushing both sharply lower in 2022. As investors have begun to sniff out a potential end to the central bank's tightening campaign in 2023, rallies have ensued. In recent remarks, the Fed chairman and other policymakers have said they see signs of "disinflation" underway, but that they remain data-dependent in regard to the path of interest rates from here.
The DJIA is Bullish, and needs to break OH resistance at 34,400; S&P 500, Nasdaq Composite, and Nasdaq 100 turned Bullish; Russell 2000 continues Bullish. Weekly Market Breadth indicators: Nasdaq Composite market Bullish; NYSE market- Bullish. Value stocks have dominated the market since January 2022. For the first time this year, we see indications that Growth stocks are beginning to gain vs. Value stocks.
Bullish - Materials, Energy, Financials, Industrials, Communication Services, Technology, Real Estate, Consumer Discretionary, and Gold Miners. Bull alert: none, Bear alert: Staples, Health Care
The 10-year US Treasury Yield closed today at 3.717% up from last week's 3.634%. Its long-term uptrend makes a topping pattern.
The 2-year US Treasury Yield closed today at 4.52% up from last week to 4.44%. The long-term uptrend is slowing.
The 10-2-year Yield Curve remains inverted, the closing spread narrowed slightly to -0.80 from last week's -0.81 and made a double bottom with December 2022.
The Bullish trends of the Australian Dollar, Euro, British Pound, and Yen continue but have pulled back vs. US dollar.
The US Dollar Index, while Bearish, appears to have bottomed February 2 and closed up at 103.25. The US dollar is nearing a Bull alert signal.
Gold, while Bullish, pulled back from overbought as did Base Metals and Copper; West Texas Light Crude bounced up forming a double bottom.