Get ready for an eventful week in the stock market! Following a positive jobs report last Friday, the Consumer Price Index (CPI) and Producer Price Index (PPI) are scheduled for release this week, which are key indicators of inflation and will set the tone for earnings season. Coming off a positive jobs number on Friday, the market is up slightly but we would expect the ride to continue to be bumpy for the immediate near term. The market was closed on Friday but was eagerly waiting for the jobs number.
The jobs number showed signs of an economy growing with nonfarm payroll numbers at 236,000. The street was expecting 238,000. The unemployment rate dropped to 3.5% from 3.6% the month before. This number is showing that inflation is starting to slow a tad, but the jobs and economy remain in a decent shape. Bottom line, inflation is still refusing to slow down and you can expect more rate hikes going into the future. The FED has made it clear that increasing the unemployment rate would be a key factor in controlling inflation. The unemployment rate is surprising stable. Good for employees but not slowing down inflation.
This week we have the CPI and PPI due out on Wednesday and Thursday. These are two key numbers in the battle against inflation. This will be followed by earning season. We would expect the stock market to be volatile going into the next few weeks. As the FED has said, they (and the market) will be very data dependent going into the rest of the year. If you are a buyer in this market, plan for the long-term. You could be a hero, but you could also be sitting on more loses for a while. Your focus needs to be 2-5 years out.
Buckle Up! This will be a fun ride in the stock market this week.
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