Stocks Closed Higher Yesterday, Many Indexes At New All-Time Highs Stocks closed higher yesterday after trading lower for much of the morning. Virtually all of the indexes made new all-time highs in the process, while the Nasdaq had to settle for 'just' a new YTD high. Follow through from last week's good enough employment report (50,000 jobs in December vs. the consensus for 55,000) helped lift stocks, as it underscored the economy's resilience, but was weak enough (especially with the ongoing downward revisions to previous reports) for the Fed to continue to be concerned with downside risk to the labor market, which suggests another rate cut is likely in the earlier part of the year (March?). While the labor market has recently become the chief concern for the Fed, they still have a dual mandate of price stability and maximum employment. And we'll get another look at price stability (inflation) this morning (Tuesday, 1/13) with the Consumer Price Index (CPI – retail inflation), which looks at the rate of inflation for December. The headline consensus is calling for a 0.3% m/m increase vs. last month's 0.2% pace, with the y/y rate at 2.6% vs. last month's 2.7%. The core rate (ex-food & energy) is forecast at 0.3% m/m vs. last month's 0.2%, while the y/y rate is estimated at 2.7% vs. last month's 2.6%. On Wednesday, we'll get a look at the Producer Price Index (PPI – wholesale inflation), but first things first. The market appeared to shrug off reports that the DOJ is investigating Fed Chair Jerome Powell over his testimony about the renovations at the Fed Reserve. Mr. Powell released a statement and video saying these were pretexts for his potential ouster, and said the investigation was really about not changing monetary policy "following the preferences of the President." The President has previously said he does not plan on removing the Fed Chair. (His term expires in just 4½ months.) And the President said it was the first time he heard about the investigation. Previous Fed Chairs (Janet Yellen, Ben Bernanke and Alan Greenspan) came out in Powell's defense and the independence of the Fed. In other news, after the close, President Trump said he will levy a 25% tariff on any country doing business with Iran. This comes amid warnings from the U.S. over Iran's violent crackdown on anti-government protesters where approximately 2,000 have been killed. The White House has been mulling over if and how to respond militarily. Meantime, Iran is said to have reached out to the U.S. for negotiations, all while ratcheting up the incendiary rhetoric against the U.S. Q4 earnings season 'officially' starts next week. But it unofficially has already begun. Big banks JPMorgan Chase, and The Bank of New York Mellon, along with Delta Airlines (to name a few) report today. Tomorrow we'll hear from Bank of America, Citigroup and Wells Fargo. On Thursday we'll get earnings from Goldman Sachs, Morgan Stanley, BlackRock and the largest contract chip maker Taiwan Semiconductor. And on Friday we'll hear from Regions Financial, PNC Financial Services, and State Street. Earnings season is always an exciting time since stocks typically go up during earnings season. And I'm expecting no less again this time around. In the meantime, stocks are off to a great start to the year. And to the week. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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