To The Moon

1. Market Rally and Key Drivers

U.S. markets saw significant gains today, with the $.IXIC(.IXIC)$ leading the charge, up 2.5% $NVIDIA(NVDA)$ $Tesla Motors(TSLA)$ $Apple(AAPL)$ . The $.SPX(.SPX)$ and Dow Jones Industrial Average followed suit, climbing 1.8% and 1.7%, respectively. The rally was fueled by softer-than-expected core inflation data, robust earnings reports from banks, and news of a ceasefire deal in Gaza, which brought optimism for geopolitical stability.

2. Inflation: Softer Core, Sticky Headline

Slowdown US inflation

The Consumer Price Index (CPI) rose 2.9% year-over-year in December, slightly exceeding November’s 2.7% and economists’ expectations of 2.8%. Monthly headline inflation also accelerated, rising 0.4%, up from 0.3% in November.

However, core CPI, which excludes volatile food and energy prices, offered a rosier picture. It slowed to 3.2% year-over-year in December, down from 3.3% in November and below economists’ expectations. Monthly core CPI grew just 0.2%, improving from November’s 0.3%. Softer shelter and services price growth contributed to the cooler core reading, alleviating concerns about persistently high inflation.

3. Implications for the Federal Reserve

The inflation data likely supports the Federal Reserve's plan to pause interest-rate cuts at its upcoming meeting. The Fed has already lowered rates by a full percentage point in 2024, and the latest readings suggest progress toward price stability.

According to Morningstar’s Preston Caldwell, the Fed’s preferred core inflation gauge—core personal consumption expenditures (PCE)—is projected to grow 0.20% month-over-month in December. This aligns with the Fed’s 2% annual target when viewed over a three-month trend, signaling benign inflationary pressures.

4. Earnings Season and Consumer Outlook

Major U.S. banks opened earnings season with strong results, boosting investor confidence. Despite the positive market response, higher energy prices and stubbornly elevated food inflation in December continued to weigh on consumers, highlighting lingering economic challenges.

Conclusion

Today’s market rally reflects growing investor confidence, driven by softer core inflation, robust bank earnings, and geopolitical progress. While headline inflation remains a concern, cooling core metrics provide hope for sustained economic stability. The Federal Reserve appears on track to maintain its current policy stance, with inflation nearing its target range.

If you find this post interesting, give it wings! ️ Repost and share the insights. Do consider “Follow me” and get firsthand read of my daily new post. Thank you.

@TigerStars @Tiger_SG @TigerCommunity @Tiger_comments @Daily_Discussion @CaptainTiger

This summary is for informational purposes only and should not be interpreted as investment advice. Always consult a financial professional for personalized guidance.