Stocks Down On IMF Report, Inflation Still The Main Focus

Plus 5 New Strong Buys for Today Stocks Down On IMF Report, Inflation Still The Main Focus [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Down On IMF Report, Inflation Still The Main Focus [Stocks Down On IMF Report, Inflation Still The Main Focus]Image: Bigstock Stocks closed mostly lower yesterday with only the Dow eking out a small gain. Inflation, and therefore interest rates and what that means for the economy, remains the number one issue for the market. That being the case, all eyes will be on Thursday morning's Consumer Price Index (CPI) report, which will give us another look at whether inflation is cooling down or heating back up. In other news, stocks lost ground yesterday after the International Monetary Fund (IMF) lowered its forecast for global GDP in 2023 to 2.7% from their previous estimate of 2.9%. (Their estimate for 2022 was unchanged at 3.2%.) The modest decline was not such a big deal, but the language accompanying their forecast with phrases like "stormy waters," and "the worst is yet to come," spooked the market. They went on to say that they expect about one-third of the global economy to experience a recession (of at least two quarters in a row of contraction). On the U.S. front, our economy appears to be getting ready to exit its recession. In Q1, we lost -1.6%. In Q2 we lost -0.6%. But in Q3, the Federal Reserve Bank of Atlanta, via their GDP Now forecast, is estimating Q3 GDP to come in at 2.9%. (Once the economy starts growing again, it's no longer a recession.) But again, it all goes back to interest rates and inflation. The sooner inflation begins to cool, the sooner the Fed can slow the trajectory of interest rate hikes. Since they have been so behind the curve, their aggressive stance this year with three back-to-back 75 basis point hikes (and likely a fourth come November), is just getting them caught up to where they should have been much earlier in this cycle. But the Fed has already hinted that rates are likely to hit 4.40% in 2022 and 4.6% in 2023. So we are getting close to the Fed's predicted terminal rate. (The Fed Funds Rate is currently at a midpoint of 3.13%. If they raise another 75 bps, that would put it at 3.88%, which leaves another half point rate hike in December to get to 4.38%.) Whenever they end, they are expected to hold those rates there for a while. But the question of where they end is still on the table. And they continue to say that they will look at the data to guide their decisions. Hence the focus on Thursday's CPI (amongst other things). Before that, however, we'll get MBA Mortgage Applications today, along with the PPI-Final Demand report, the Atlanta Fed Business Inflation Expectations, and the FOMC Minutes from September's FOMC Meeting. Could be a busy few days. See you tomorrow, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research Sponsor [Former Goldman Sachs Exec: "5 billionaires are betting Elon Musk is dead wrong."]( Elon Musk calls [this the key to "Tesla's future."]( And no, it's not a new electric car. It's a giant factory called a "Gigafactory." Musk spent over ten billion dollars building multiple Gigafactories around the world. All to profit from an emerging trend Forbes reports will be worth over $130 trillion dollars. But after visiting the Gigafactory in Austin, Texas... Former Goldman Sachs executive Dr. Nomi Prins says the real story is NOT these huge factories. Because she's discovered five billionaires are betting against Elon Musk... 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