Equity Markets Rebounded Higher Last Week

Equities rallied notably last week as many investors awaited this week’s Federal Reserve meeting in anticipation of at least a 25.0-basis-point reduction in interest rates. Nine of the 11 market sectors ended last week higher, led by information technology. Only financials and energy lagged. The yield on 10-year Treasuries slipped to its lowest level since May 2023. Crude oil prices posted the first weekly advance in over a month. The dollar fell amid expectations of the aforementioned interest rate cut.

Consumer Price Index Data Released for August

The Consumer Price Index increased 0.2% in August and 2.5% over the last 12 months. This is the smallest 12-month increase since February 2021. Excluding food and energy prices, the CPI rose 0.3% last month (0.2% in July) and 3.2% since August 2023. The index for shelter rose 0.5% in August and was the main factor in all of the items’ increase. The food index increased 0.1% in August after rising 0.2% in July. The energy index fell 0.8% over the month after being unchanged the preceding month. Over the last 12 months, prices for food rose 2.1%, energy fell 4.0% and shelter rose 5.2%.

Eye on the Week Ahead

The focus will be squarely on the Federal Open Market Committee (FOMC), which meets this week for the first time since July. While it appears the FOMC will lower its target rate, the debate over by how much continues. Many observers are predicting that the Fed will cut rates by 50.0 basis points in light of inflation moving closer to the 2.0% Fed target and the slowdown in employment.