1. Moving the markets

On a day when the inflation report played nice and mostly met the expectations for February, the stock market decided to throw a little party of its own. The consumer price index, which is like the economy’s thermometer, rose by 0.4% last month, hitting a 3.2% year-over-year fever. The economists’ crystal balls predicted this well, except they were off by a smidge, expecting a 3.1% annual increase.

Now, let’s talk about core inflation – that’s inflation without the mood swings of food and energy prices. It got a bit spicy, rising 0.4% in February, which is a tad hotter than the forecasted 0.3%. Year-over-year, it’s up by 3.8%, outpacing the 3.7% forecast. But hey, it’s still the coolest it’s been since April two years ago.

Diving deeper into the numbers, we find the ‘Super Core’ – think of it as the core of the core, minus housing costs. It jumped 0.5% month-over-month, reaching a scorching 4.5% year-over-year – the highest since the days of May 2023.

Some Wall Street folks are sweating over these numbers, thinking they might throw a wrench in the Federal Reserve’s plans to start slicing interest rates come June. The road to their 2% inflation target is looking a bit more like a game of “Where’s Waldo?”

In the tech world, stocks were on a caffeine buzz. Nvidia’s shares leaped 3%, Microsoft edged up about 2%, and Oracle? Well, they blasted past 10% after showing Wall Street they’ve got the earnings muscle.

As traders shift their gaze to the upcoming producer price index (PPI) and the Fed’s monetary policy huddle later this month, the financial playground is getting interesting.

Bond yields climbed the jungle gym, the MAG7 stocks bounced back like they’re on a trampoline, the dollar did a hopscotch routine, and gold took a breather after sprinting to record highs.

With a few more economic breadcrumbs left this week, the market could flip faster than a pancake at a breakfast buffet.

So, the question remains – will the market end the week flexing for the bulls or playing dead for the bears?

1. Moving the markets

In the unpredictable world of Wall Street, stocks took a morning dive but didn’t forget their floaties, bobbing back up by closing time as the recent record-breaking rally decided to take a breather. Meanwhile, traders played a game of ‘hot potato’ with their portfolios, not wanting to get burned before tomorrow’s sizzling Consumer Price Index (CPI) data reveal.

Tech titan Super Micro Computer felt a chill, dropping 7%, while Nvidia played ‘Red Light, Green Light’ with its stock price in a market that’s more jittery than a caffeinated squirrel. The big question on investors’ minds: Can AI stocks keep climbing, or have they reached their silicon peak?

As the CPI looms like a pop quiz on Tuesday, the Dow Jones’ pencil pushers predict a 0.4% month-over-month increase and a 3.1% year-over-year hike. When you strip away the unpredictable food and energy sectors, the core CPI is expected to tick up 0.3% for the month and 3.7% annually.

This financial foreplay sets the stage for the Producer Price Index (PPI) and Retail Sales data later in the week, all leading up to the Federal Reserve’s March policy meeting. Will the Fed play rate-cut fairy godmother in 2024, or will February’s inflation data be the cold shower that sobers up their rate reduction dreams?

As the market holds its breath for the “most important data item in the whole wide world ever,” stocks tiptoed on thin ice, bond yields climbed the ladder, and the dollar and gold decided to play dead.

But crypto? It’s off to the races, with Bitcoin galloping to almost $73,000, leaving Nvidia in the dust, nursing an 8% tumble over two days and a 14% slide from its peak.

So, as we stand on the eve of the CPI showdown, one must wonder: Will tomorrow’s figures give the bulls a red cape to charge at, or will the bears get their honey pot?

1. Moving the markets

The stock market recovered some of its losses on Thursday, as investors cheered lower inflation forecasts from Europe and higher tech stocks. The European Central Bank cut its projections for inflation and growth for this year but kept its interest rates unchanged. This suggested that inflation was not a global threat.

The ECB’s decision followed the testimony of Federal Reserve Chair Jerome Powell, who said on Wednesday that he expected interest rates to fall this year, but that the Fed was not in a hurry to cut them. Powell’s words calmed the market’s nerves about rising inflation and interest rates.

Thursday’s rally added to Wednesday’s rebound, which was the first positive day of the week for the three main stock indexes. Despite the rough start to the week, the S&P 500 turned green for the week and was on track to have its 17th winning week out of the last 19 – the best run since 1964.

The dollar continued to slide and hit its lowest level since January 15th. It was the fifth consecutive day of losses and the biggest two-day drop since mid-December. As the dollar sank, everything else soared – stocks, bonds, bitcoin, and gold.

The MAG7 stocks bounced back from Tuesday’s slump, ahead of Friday’s jobs report. Bond yields fell, bitcoin rose to $68,000 and closed at a new record high. Oil prices moved sideways and ended the day flat.

Not everyone on Wall Street was happy about the market’s unstoppable optimism. JP Morgan’s trader Matt Reiner admitted this in a note to clients:

Today just feels… different. I have a feeling that we’re at the top of some mysterious turning point in the market. I can’t get rid of it.

Are the markets really at a tipping point?