Stock market faces crucial test this week: 3 Q's that may decide rally’s fate
There will be no rest for investors this week as they await a marquee report on the state of the U.S. labor market, along with biannual Congressional testimony from Federal Reserve Chairman Jerome Powell.
Since then, weekly jobless benefit claims have continued to show few Americans filing for unemployment benefits, fueling expectations that another blockbuster gain in jobs could be due in the data for February next Friday, which in turn could force the Federal Reserve to resort to even more aggressive interest rate hikes, according to Steve Sosnick, chief strategist at Interactive Brokers, during a phone call with MarketWatch.
What will Powell say? Investors haven’t heard from Powell since he participated in a Q&A at the Economic Club of Washington on Feb. 7. The cost of living rose 0.5% in January, the biggest increase in three months, according to the consumer-price index released Feb. 14. The annual rate of inflation, meanwhile, slowed again to 6.4% from 6.5%, but economists had expected an even larger decline. The January producer-price index and the core personal consumption expenditure index, the Fed’s favored inflation measure, also came in hotter than expected.
The fact that investors can now earn a yield north of 5% by simply buying six-month Treasury bills means stocks are now facing major competition from a far less risky asset class, according to Callie Cox, U.S. investment analyst at eToro. See: Inflation data pushed the 10-year Treasury yield above 4%. How much higher can interest rates go?
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