It was another quiet day for stocks with a slight bias to the downside. The Producer Price Index came in as expected and combined with the CPI, the inflation picture continues to be muted. With that the market’s odds that we see a Fed rate cut in July went up to 80%. So, if stocks rallied last week based on the belief that the Fed is going to cut rates, what will stocks do if the Fed does actually cut rates- or more importantly what will stocks do if the Fed doesn’t cut rates in July?
As for today, the Dow Jones Industrial Average was down 42 points to finish the day at 26,005. The S&P 500 was down 5 points to close at 2,879. Gold was up $5 to trade at $1,336 per ounce, while oil was down $2.15 to trade at $51.12 per barrel WTI.
As we approached the previous stock market highs, it appears that the bulls ran out of gas. Maybe, they also ran out of conviction too. Sure, if the Fed cuts rates it feeds into the TINA narrative, but what does it say about the economy and future corporate earnings? Plenty of things to contemplate for market participants.
Have a nice evening everyone.