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Stocks Tick Up as Traders Brace for Inflation Data, Fed Rate Decision

A stacked week of economic news is about to unfurl as markets eye a cooling inflation report and a rate pause by the Federal Reserve.

Starting the week strong as we wait for Inflation Data and Fed Rate Decision

Key Takeaways

  • November’s inflation print is expected to land at a cool 3.1% from a year ago.
  • The Federal Reserve is set to keep interest rates unchanged at 5.25% to 5.50%.

Stocks Gain Ahead of Key Data

The Dow Jones Industrial Average advanced a modest 0.4% to kick off the trading week as market participants remained optimistic over the near-term prospects. Its two peers, the S&P 500 and the Nasdaq, also notched gains. The prevalent theme this week revolves around inflation data and a busy schedule for central bankers globally. 

To get markets started, the Bureau of Labor Statistics in the US will publish the monthly inflation report. A soft 3.1% price growth is eyed by Wall Street professionals, solidifying the downward trajectory in line with October’s 3.2% annual increase.  

Analysts are hopeful that another cheerful data set will convince officials at the Federal Reserve that inflation has peaked. In turn, that could lead to the US central bank retreating from its aggressive rate hike campaign which boosted interest rates by 500 basis points in about a year. 

A Week for Central Bank Lovers

Coming in hot this week are interest rate decisions by major central banks. Starting Wednesday, the Federal Reserve kicks off a wave of monetary policy updates. The US central bank, headed by Jerome Powell, is predicted to keep interest rates unchanged at 5.25% to 5.50%.  

Moving on, Thursday comes with a flurry. The central banks of Europe, the UK, and Switzerland are lined up to, again, hold their interest rate campaigns flat. Markets have mostly priced in these meetings as non-events. What’s more, Wall Street is hoping to get some hints on a potential interest rate downgrade for 2024. In that context, any surprise response from global central banks may throw markets into a volatile state of affairs. 

What’s In It for You?

Paying attention to market updates and economic reports is key for your trading performance. Even more so when it comes to the keenly watched inflation reports and decisions by major central banks. To ensure your portfolio doesn’t get affected by foul play at the markets, use stop losses, monitor your trades, and stick to a trading strategy.