Weekly Economic Update – 02/20/2024

The Week on Wall Street

Stocks fell last week as investors reacted to disappointing inflation updates and other economic reports that fell short of estimates.

Stocks Snap Winning Streak

Markets were quiet Monday but opened lower Tuesday in response to the January inflation report that showed higher-than-expected consumer prices. But stocks regained some momentum on Wednesday and rallied Thursday despite disappointing reports on both retail sales and industrial production for January.1,2

News of higher-than-expected wholesale prices on Friday put investors back on edge and kept stocks from ending the week on a positive note. The weekly loss broke a five-week winning streak.3

Inflated Perspective

Consumer Price Index data was one of the big pieces of news driving markets last week, with January’s numbers coming in at 3.1 percent compared to a year prior—cooler than December’s 3.4 percent year-over-year gain but warmer than the 2.9 percent consensus. Jittery Investors focused on the hotter-than-expected part.4

With the consumer report closely followed by disappointing inflation news on the producer level, attention quickly shifted to the Fed and what’s next for interest rates. While the Fed has indicated short-term rates may trend lower in 2024, the January inflation reports support Fed Chair Powell’s recent comments that the Fed is in no hurry to cut rates.4

Weekly Riddle

What can explode slowly, with no smoke or flame?

 Last week’s riddle: If a single-engine airplane taxied not onto a runway but onto an enormous conveyor belt whose speed precisely equaled that of the plane in the opposite direction, could the plane still manage to take off?

Answer: Yes, eventually. A plane’s wheels roll freely, and the thrust generated by the prop or jet engine will still be greater than drag, and the lift created by air flowing over the wing will still be greater than the aircraft’s weight.

John Dombroski Jr. may be reached at (480) 991-1055 or [email protected]
www.grandcanyonplanning.com

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