Stocks Hold Steady, Dollar Strengthens; Investors Eye CPI Data

In New York on February 13th, global stock indices exhibited marginal movement, while the US dollar experienced a slight uptick as investors awaited the forthcoming US Consumer Price Index (CPI) report. This report is poised to offer insights into the Federal Reserve’s (Fed) potential timeline for initiating interest rate adjustments.

Cryptocurrency Market and S&P 500 Performance

Bitcoin surged past the $50,000 threshold for the first time in over two years, demonstrating renewed investor interest in digital assets. Bitcoin recorded a 4.3% increase, reaching $49,610, while ether also witnessed a 4.12% uptick, reaching $2,607.57. Notably, crypto-related stocks, including Coinbase Global, saw gains, with Coinbase Global climbing by 3.3%.

Meanwhile, the S&P 500 experienced minor fluctuations, dipping slightly during afternoon trading after achieving a fresh intraday record high. Last week marked a significant milestone as the S&P 500 surpassed 5,000 points for the first time in its history. The MSCI world stock index maintained stability, hovering near its highest level since January 2022.

Anticipation for CPI and Retail Sales Reports

Investors await the January Consumer Price Index report scheduled for Tuesday, as well as the subsequent US Producer Prices report later in the week. Additionally, attention is focused on Thursday’s US retail sales report for January. Recent data suggesting a resilient economy has tempered expectations for a Fed rate cut at its upcoming meeting.

Fed Rate Cut Expectations

Market sentiment indicates a diminished likelihood of rate adjustments by the Fed in the near term. Currently, there is an 84.5% probability of rates remaining unchanged in March. Similarly, expectations for at least a 25-basis-point rate reduction in May have dwindled to 61%, down from over 95% at the beginning of 2024, according to the CME FedWatch Tool.

Marc Chandler, Chief Market Strategist of Bannockburn Global Forex in New York, remarked, “Soft CPI and soft retail sales should help boost the Fed’s confidence that inflation is coming back to its target.” This sentiment reflects the market’s anticipation of the forthcoming CPI report as a crucial determinant of the Fed’s monetary policy trajectory.

Market Indices Performance

The Dow Jones Industrial Average advanced by 120.02 points, or 0.31%, to reach 38,791.71, while the S&P 500 experienced a minor decline of 2.42 points, or 0.05%, closing at 5,024.19. Similarly, the Nasdaq Composite registered a modest decrease of 35.74 points, or 0.22%, concluding the session at 15,954.92. European stocks witnessed a 0.5% increase, contributing to the stability of the MSCI world equity index, which tracks shares across 49 nations.

Holiday Closures in Asian Markets

Numerous Asian markets, including those in China, Hong Kong, Japan, South Korea, Singapore, Taiwan, Vietnam, and Malaysia, were closed for holidays. Mainland China’s financial markets observed closure in observance of the Lunar New Year holiday and are scheduled to resume trade on February 19th, while Hong Kong markets will reopen on February 14th.

European Central Bank’s Stance on Rate Cuts

Investor expectations for rate cuts by the European Central Bank (ECB) were tempered following remarks by two policymakers last week. These officials suggested that the ECB requires additional evidence of easing inflation before considering rate adjustments.

Currency and Commodity Markets

The US dollar exhibited marginal gains against the yen, reaching 149.37, while the euro experienced a slight decline, reaching $1.077. The dollar index, which tracks the greenback against a basket of major currencies, rose to 104.14. Oil futures experienced mixed results, with concerns over interest rates and global demand prompting a momentary pause in the market following a recent 6% surge in prices. US crude rose by eight cents to $76.92 a barrel, while Brent crude fell by 19 cents to $82. Spot gold prices observed a 0.3% decline.

The global financial markets exhibited subdued movement on February 13th, as investors awaited the release of key economic data, notably the US Consumer Price Index report. Despite the anticipation surrounding potential Fed rate adjustments, market sentiment remained relatively stable, with cryptocurrency markets witnessing notable gains. Attention is now focused on forthcoming economic indicators to gauge the trajectory of monetary policy and market dynamics.

Market Performance

Featured image credit: MicroStockHub via iStock