U.S. Stock Market

Stocks Move Higher As Inflation Remains Under Control

Inflation Reports Show That Prices Are Not Moving Higher Than Expected

The U.S. has just released Inflation Rate and Core Inflation Rate reports for February. Inflation Rate increased by 0.4% month-over-month in February, in line with the analyst consensus. On a year-over-year baisis, Inflation Rate grew by 1.7%.

Meanwhile, Core Inflation Rate grew by 1.3% compared to analyst consensus of 1.4%. The reports did not show that pricing pressure is increasing, and Treasury yields have started to move lower after their release.

Not surprisingly, S&P 500 futures gained upside momentum in premarket trading as lower inflation will lead to lower Treasury yields, which is bullish for the stock market and precious metals.

The Market Waits For Stimulus Package

Today, the House of Representatives is set to approve the huge $1.9 trillion coronavirus relief package which has served as supportive catalyst for the stock market this year but pushed Treasury yields to multi-month highs.

Some analysts believe that a material part of $1,400 stimulus checks will go directly to the stock market which will be bullish for equities.

It remains to be seen whether the stimulus package was fully priced in by the market or there is room for more upside. Stocks have become expensive after the historic rally from the lows seen back in March 2020, and traders may want to see more positive catalysts before pushing equities to new highs.

Oil Rebounds Despite Rising Crude Inventories

API Crude Oil Stock Change report indicated that crude inventories increased by 12.8 million barrels compared to analyst consensus which called for a decline of 0.8 million barrels.

The report also showed that gasoline inventories declined by 8.5 million barrels while distillate inventories decreased by 4.8 million barrels, so it was not as bearish as one might have implied by looking at the headline crude inventories number.

WTI oil gained some upside momentum and is currently trying to settle above $64.50. If WTI oil manages to settle above this level and moves towards the psychologically important $65 level, oil-related equities will get more support at the beginning of today’s trading session.

For a look at all of today’s economic events, check out our economic calendar.