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Investing.com — Stocks soared after a better than expected report on inflation for last month gave credence to the view that the Federal Reserve will start to ease off its interest rate hikes.
Of course that won’t come until December, when the Fed next meets. But already the expectation is building for it to raise rates by a half-percentage point, rather than the 0.75 percentage point increases at each of its last four meetings.
That notion lit a fire under growth stocks on Thursday, sending the Nasdaq 7% higher and the Dow up more than 1,100 points.
In order to come to that decision, the Fed wants to see evidence that its policy moves up until now are doing their job to combat inflation. Its goal is to stop inflation in its tracks, even if that means some pain to the economy such as rising joblessness. But a tight labor market has persisted.
Inflation may have peaked in June, according to the report on the consumer price index, which hit its lowest level since January. But as any household shopper could say, prices are still running high for whole categories of food and necessities, and that means some are making tradeoffs in their discretionary purchases.
This is an especially fraught time for retailers, which are trying to position themselves for the holidays but find they have to mark down inventory prices to clear it. Earnings reports from the batch of big retailers begin next week.
Here are three things that could affect markets tomorrow.
1. Michigan sentiment
The consumer sentiment reading for November will come out at 10:00 ET (15:00 GMT). Analysts forecast a reading of 59.5, which would compare with the previous reading of 59.9.
2. Climate summit
President Joe Biden is making his way to the U.N.’s Climate Change Summit in Egypt and will be in attendance Friday. Leaders want to create incentives for private industry to participate in carbon credits to help developing nations make the transition from fossil fuels to clean energy. After that, Biden will travel to Cambodia and then Indonesia for the G-20 meeting.
3. Veterans Day
Friday, Nov. 11, is the Veterans Day holiday in the U.S. Stock markets are open for normal hours, but the bond market is closed.
