Market Rally Awaits CPI Inflation Report, Federal Reserve; 5 Stocks

Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures, with attention squarely on the CPI inflation report and the Federal Reserve.

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The stock market rally retreated last week with the major indexes continuing their trend of popping to new highs but then fading back. It’s a challenging environment for buying stocks.

This coming week investors get a one-two shot of big economic news. On Tuesday, the Labor Department will release its November CPI inflation report. On Wednesday afternoon, the Federal Reserve will hike rates yet again with Fed chief Jerome Powell offering signals about further tightening in early 2023.

That could be a catalyst for big market gains or losses, or choppy sideways actions could continue. Investors should likely wait for the inflation report and Fed news before adding exposure.

Breakout failures or fizzles are widespread, with DXCM stock tumbling back Friday after briefly clearing a buy point Thursday on FDA approval.

But here are five stocks to watch: Dow Jones giants Caterpillar (CAT) and Goldman Sachs (GS), Sanmina (SANM), McKesson (MCK) and MercadoLibre (MELI). To be clear, none of these stocks are actionable, with MELI stock in particular needing some work.

Microsoft (MSFT) is faring relatively well for the megacaps, with Apple (AAPL) below its 50-day line and Tesla (TSLA) trying to avoid setting new bear market lows. But MSFT stock remains well below its 200-day line and hasn’t made much progress over the past month.

The video embedded in the article reviewed the market action in depth and analyzed Dexcom (DXCM), MercadoLibre and CAT stock.

Economy, S&P 500 Face Hard Landing — Unless The Fed Does This

CPI Inflation And Fed Meeting

Early Tuesday, the Labor Department will release the November consumer price index. Overall and core CPI inflation rates should cool over the next several months, if only because comparisons are getting tougher. But services prices have been stubbornly strong.

The Federal Reserve wants to see more-substantial declines on services inflation, as well as wage gains, before halting rate hikes. At 2 p.m. ET, the Fed is expected to raise its fed funds rate by 50 basis points, to 4.25%-4.5%, ending a string of four 75-basis-point hikes. Investors will want some clues about the February meeting, and how high the fed funds rate may ultimate reach. Markets are currently pricing in another half-point Fed rate hike in February, though there’s a decent chance of a quarter-point move.

Fed chief Powell’s comments at 2:30 p.m. ET, along with the CPI inflation report, may set the tone on Fed policy heading into 2023.

Powell and several policymakers have signaled that a recession may be necessary to bring inflation under control.

Dow Jones Futures Today

Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual…