Stocks End Lower After FOMC Minutes, PPI Inflation Report On Deck This Morning

Plus 5 Just-Added Strong Buys Stocks End Lower After FOMC Minutes, PPI Inflation Report On Deck This Morning [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks End Lower After FOMC Minutes, PPI Inflation Report On Deck This Morning [Stocks End Lower After FOMC Minutes, PPI Inflation Report On Deck This Morning]Image: Bigstock Stocks closed lower yesterday, erasing earlier gains from the morning. Yesterday's Consumer Price Index (CPI) showed headline inflation rising 0.1% m/m, which was under last month's pace of 0.4% and the consensus for 0.3%. On a y/y basis it was up 5.0% vs. last month's 6.0% and views for 5.2%. The core rate (ex-food & energy) was up 0.4% m/m vs. last month's pace of 0.5% and the consensus for 0.4%, while the y/y rate came in at 5.6% as expected, which was a bit higher than last month's 5.5%. So, the headline rate in March fell a full percentage point, which was a little better than expected, while the core rate ticked up a tenth of a percent, also as expected. Not the greatest report. But fine enough. Although, with oil going back up, there is some concern over what that could do for the headline number next month. The core rate, of course, excludes oil, but that already ticked up on the other inputs. For perspective though, it's important to remember that core CPI is still down considerably from last year's high of 6.6%. Stocks were higher for most of the morning and early afternoon. But the FOMC Minutes weighed on prices after it was revealed the Fed expects some weakness later in the year. This isn't entirely new given that Fed Chair Jerome Powell said as much after last month's Fed meeting when he forecast full-year 2023 growth at 0.4%. (How else do you get to 0.4% annualized growth when Q1 GDP is currently forecast at 2.2%? That suggests a slowing.) But the minutes seemed to give more context, and didn't require any inference. For one, they seemed to pin their forecast for slowing on last month's banking scare. While Fed Vice Chair for Supervision Michael Barr said the banking sector is "sound and resilient", it was noted that staff economists believed there would be some economic fallout. The minutes summary reads, "given their assessment of the potential economic effects of the recent banking-sector developments, the staff's projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years." Although, at that time, many wondered if there would be any banking contagion. But since then, plenty seem to think that the banking issue was an anomaly, and that it's been contained. If so, is that mild-recession forecast still in play given that the banking issue seems to be resolved? Or should that 'old' forecast, which in hindsight, seems to be predicated on old/stale concerns, be dismissed? That'll be the latest thing people will be talking about. On a positive note, the minutes noted that given the "effects of less projected tightness in product and labor markets, core inflation was forecast to slow sharply next year." In the meantime, we'll get another look at inflation this morning with the Producer Price Index (PPI) report. That comes out at 8:30 AM ET. We'll also get Weekly Jobless Claims too. All in all, the economy and the market continues to be resilient. There are plenty of sectors and industries doing excellent right now. Some have already broken out, while others are poised to. And there's one in particular that's on the verge of a major breakout. To learn all about it and how to take advantage of it, be sure to read our latest commentary... 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