Week ahead: US stocks face inflation test as AI last week’s market downturn.
The trading week will be abbrets closed on Wednesday
October’s CPI is projected to show headline inflation rising 0.28% month over month, with core inflation expected to climb 0.21%. The bank noted that a softer core reading would provide some relief following September’s unexpected spike, though it would likely remain insufficient to alter expectations for a Federal Reserve rate hike in December.
Year-over-year comparisons will not be available due to a data gap resulting from last year’s government shutdown.
Deutsche Bank also anticipates that both headline and core CPI will increase by 0.20%, suggesting a potential moderation in price pressures compared to September. Investors will also be monitoring Friday’s producer price index (PPI) for insights into the trajectory of the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures index.
These inflation figures follow a stronger-than-anticipated October jobs report, which saw nonfarm payrolls grow by 165,000—well above the 65,000 forecast. This data has reinforced the belief that the Fed may need to maintain a restrictive monetary policy for an extended period.
Federal Reserve officials will have numerous opportunities to provide guidance, with scheduled appearances from Austan Goolsbee, Tom Barkin, Jeffrey Schmid, Lorie Logan, and Mary Daly, among others.
Deutsche Bank projects that the Fed will implement a 25-basis-point rate hike in December and another in March, arguing that the labor market and broader economy remain robust while inflation continues to track above the target level.
Artificial intelligence will remain a focal point amid fluctuations in technology shares and uncertainty regarding the regulatory landscape following the Democrats’ strong <a s central role in the company.
Brooks said the episode could also strengthen calls for greater scrutiny of the AI industry, although it does not necessarily threaten Nvidia’s longer-term sales outlook.
