The stock market chugged along this week after Wall Street finally got good news on inflation.
The S&P 500 is up 1.2%, and on track to gain 3.2% this week. That would be its best week since Nov. 8, according to Dow Jones Market Data. The Dow is up 382 points, or 0.9%, and 4% on the week. It’s also on track for its best week since Nov. 8. The Nasdaq Composite is up 1.7% today and 2.7% on the week, which is only good for its best week since Dec. 6.
The stock market’s biggest driver this week has been a bond market rally. Rising bond yields have been weighing on stocks in recent weeks, but some cooler-than-expected inflation numbers eased some of that pressure.
The yield on the 30-year Treasury note was down to 4.84% on Friday after spiking to about 5% this month. The 10-year yield was back at 4.61% after hitting a one-year high of nearly 4.82%.
Things kicked off with Tuesday’s producer price index, but a cooler-than-expected reading on the core consumer price index for December sparked the week’s big relief rally. Though inflation remains stubborn, the report had just enough encouraging updates to dispel worries that the Federal Reserve overdid it with rate cuts last year.
Instead, Federal Reserve Gov. Christopher Waller said on CNBC on Thursday that multiple rate cuts this year are in play, as long as inflation continues to come down. Odds of multiple rate cuts this year spiked to 47.3%, compared to 29.1% a week ago, according to the CME FedWatch Tool. Odds of no cuts this year dropped to 17.2% from 30.5%.
With rate-cut worries subsiding, the market has one less distraction just as earnings season kicks off. So far so good! Reports from big banks earlier this week topped expectations, while Taiwan Semiconductor sparked renewed excitement among chip stocks. UnitedHealth Group was among the few big names that saw shares slide this week on results.
Earnings season will heat up in the weeks ahead. It will take more blockbuster reports to push the market higher. Traders will also pay close attention to incoming President Donald Trump’s tariff plans, as well as progress on regulatory rollbacks and tax cuts.
