To The Moon

Market Recap

Stocks wobbled on Tuesday but managed to recover some losses by the close. The $S&P 500(.SPX)$ finished flat, the Dow Jones rose 0.3%, and the $NASDAQ(.IXIC)$ slipped 0.4%, as investors awaited fresh inflation data. $NVIDIA(NVDA)$ $Tesla Motors(TSLA)$ $Apple(AAPL)$ $US10Y(US10Y.BOND)$

$IXIC

Powell’s Testimony: No Surprises

Federal Reserve Chair Jerome Powell delivered a measured performance before the Senate Banking Committee, reinforcing the Fed’s stance that rate cuts are unlikely while inflation remains above target and the labor market is stable. Markets took the comments in stride, as Powell largely echoed his previous messaging.

Senate Banking Committee

January Inflation Data on Deck

The Consumer Price Index (CPI) report, due Wednesday, is expected to show that inflation remained stubborn to start 2025:

Inflation

• Headline CPI: Forecast to rise 0.3% month-over-month and 2.9% year-over-year, matching December’s reading.

• Core CPI (excludes food & energy): Expected at 0.3% MoM and 3.2% YoY, also unchanged from December.

Key Inflation Drivers:

• Food Prices: The avian flu outbreak is pushing up egg, poultry, and dairy costs. Large white egg prices surged 25% in January, per USDA data.

• Energy Prices: Gasoline rose ~2% in January, which translates to a 0.5% gain after seasonal adjustment, per BNP Paribas economist Andy Schneider.

• Seasonal Factors: January and February have seen historically stronger CPI readings post-pandemic. Annual price hikes, contract renewals, and minimum wage increases could further pressure services inflation.

What’s Next for the Fed?

Wednesday’s CPI won’t be the final word for policymakers. The Fed meets on March 18-19, with another month of inflation and jobs data in hand. While markets are still betting on rate cuts later this year, a hotter-than-expected inflation reading could push expectations further out.

Looking Ahead

Markets remain in wait-and-see mode, with inflation still running above the Fed’s 2% target. Investors will be watching closely for any surprises that could shift expectations for the first rate cut of 2025.

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.