On Monday, the Nasdaq briefly flirted with surpassing its previous record closing high from November 2021 before settling, while the Dow Jones modestly advanced ahead of crucial U.S. inflation reports. Despite a slight dip, the S&P 500 remained above the significant 5,000-point threshold achieved on Friday. Investors are closely eyeing January’s Consumer Price Index (CPI) and Producer Price Index (PPI) releases this week to gauge potential impacts on Federal Reserve policy and the likelihood of interest rate adjustments. Michael Rosen, Chief Investment Officer at Angeles Investments, emphasized the significance of the forthcoming CPI report in shaping perceptions of inflation trends and influencing the pace of future Fed fund rate cuts. As markets brace for these pivotal reports, additional data on industrial production, retail sales, and consumer sentiment from the University of Michigan will further shape the trajectory of the financial landscape.
Although the Nasdaq saw an early surge, it retreated later in the session, nearing its all-time intra-day high of 16,212.229. Investor sentiment remains susceptible to the influence of inflation data, with heightened concerns if the numbers prove to be notably high. Joe Saluzzi, Co-Manager of Trading at Themis Trading, suggested that unless inflation poses a significant threat, the Federal Reserve is expected to maintain its current stance. The past four months have witnessed a robust bull market, driven particularly by megacaps with substantial exposure to artificial intelligence. This trend reflects broader optimism surrounding the prospects of imminent rate cuts and positive business outlooks.