Dow futures tick higher on Wednesday as investors look ahead to the release of the latest consumer price index (CPI) data. The CPI, a key measure of inflation, is expected to show a rise of 0.3% in December, following a 0.4% increase in November.
Higher inflation could lead the Federal Reserve to hike interest rates to curb rising prices. However, the central bank has indicated that it will allow inflation to rise above its 2% target for a while before considering rate hikes. In addition to the CPI data, investors will also be keeping an eye on the latest weekly jobless claims data and the Empire State manufacturing index.
Higher inflation could lead the Federal Reserve to consider raising interest rates to curb rising prices. However, the central bank has indicated that it will allow inflation to rise above its 2% target for some time before considering rate hikes. This policy, known as average inflation targeting, is designed to make up for periods of low inflation in the past.
In addition to the CPI data, investors will also be keeping an eye on the latest weekly jobless claims data and the Empire State manufacturing index. The jobless claims data will provide insight into the state of the labor market, while the Empire State manufacturing index will give a snapshot of the health of the manufacturing sector in New York state.
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The strong performance of the stock market on Friday was driven by several factors, including a positive jobs report and vaccine rollout. The U.S. economy added 49,000 jobs in January, beating expectations and showing continued recovery from the impact of the pandemic. The vaccine rollout has also gained momentum, with more than 25 million doses administered to date.
In addition to the jobs report and vaccine rollout, investors were also encouraged by the signing of the $900 billion coronavirus stimulus package by President Joe Biden. The package includes direct payments to individuals, extended unemployment benefits, funding for small businesses, and vaccine distribution.
The Dow Jones analysis
The Dow Jones Industrial Average rose by 700.5 points, or 2.1%, to 33,630.6 on Friday, while the S&P 500 and NASDAQ Composite both saw gains of 2.3% and 2.6%, respectively. For the week, the Dow was up 1.4%, the S&P 500 rose by 1.1%, and the NASDAQ was slightly higher by 0.1%. During this period, U.S. 10-year bond rates stood at 3.56%.
Overall, the market is expected to continue its upward trend in the near term, with analysts citing a strong economic recovery and vaccine rollout as contributing factors. However, investors will also be keeping an eye on potential risks, including the ongoing trade tensions between the United States and China and the potential for higher interest rates.