11 Stock Market Predictions for the Week Ahead: Hot CPI Report Is Possible | Investing.com (2024)

FAQs

What will the CPI do to the stock market? ›

Stock markets typically aren't moved as much by CPI data, but can be since higher interest rates can cause business activity to slow. In general stock markets prefer a lower CPI that allows consumers to keep spending, and business to continue investing. What is the CPI reading used for?

Stock prices have surged significantly over the past 18 months. The S&P 500 is up by 45% since it bottomed out in October 2022, while the tech-heavy Nasdaq has soared by a whopping 58% in that time. Investing now, then, means paying much higher prices than you would if you'd bought a year or two ago.

The Big Money bulls forecast that the Dow Jones industrials will end 2024 at about 41,231, 9% higher than current levels. Market optimists had a mean forecast of 5461 for the S&P 500 index and 17,143 for the Nasdaq —up 9% and 10%, respectively, from where the indexes were trading on May 1.

It can be nerve-wracking to watch your portfolio consistently drop during bear market periods. After all, nobody likes losing money; that goes against the whole purpose of investing. However, pulling your money out of the stock market during down periods can often do more harm than good in the long term.

It is a key way to measure changes in purchasing trends and inflation. A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

On the basis of these inflation forecasts, average consumer price inflation should be 3.3% in 2024 and 1.9% in 2025, compared to 4.06% in 2023 and 9.59% in 2022.

The key to long-term investing success

Time is your most valuable resource when building wealth in the stock market. So rather than waiting for the ideal time to invest, it's often better to buy now and hold your investments for the long term. Even if you invest at the "wrong" time, it can still pay off over time.

Long-term investors with a horizon of years, not days or weeks, will do better to invest their money as soon as they can. The adage "time in the market beats timing the market" is true. Over long periods of time, stocks appreciate faster than inflation.

There are no set ages to get into or to get out of the stock market. While older clients may want to reduce their investing risk as they age, this doesn't necessarily mean they should be totally out of the stock market.

It's common for investors to sell shares when they've reached a certain profit goal. Suppose a particular stock has experienced significant growth and achieved the return you aimed for. In that case, you might decide to sell and secure your gains.

What are experts saying about the stock market? ›

Anthony Denier, CEO of the trading platform Webull, says he believes the stock market will ultimately post a positive return in 2024 as investors anticipate interest rate cuts by the Fed. However, he adds, we probably won't see as big of a rally as we did in 2023.

You shouldn't be. While many investors may feel nervous about the potential for a fall, our analysis of stock market returns since 1926 shows that investing at a new high can be profitable.

Losses aren't real until you sell. Some investors believe that by selling during a downturn, they can wait out difficult market conditions and reinvest when the market looks better. However, timing the market is extremely difficult, and even professionals who attempt to do this fail more often than not.

A savings account is the ideal spot for an emergency fund or cash you need within the next three to five years. Good for long-term goals. Investing can help you grow money over the long term, making it a strong option for funding expensive future goals, like retirement.

If a purchased stock continues to decline in value over time, investors may opt to offload the low-performing stock. Also, some investors sell low-performing stocks at the end of the year for tax-loss harvesting, where investors sell investments at a loss to reduce their overall tax burden.

The purchasing power of the consumer's dollar measures the change in the value to the consumer of goods and services that a dollar will buy at different dates. In other words, as prices increase, the purchasing power of the consumer's dollar declines.

The Consumer Price Index (CPI) is a critical indicator of pricing pressures in an economy and provides a gauge of inflation. Forex traders monitor the CPI, as it can lead to changes in monetary policy by the central bank that will either strengthen or weaken the currency against rivals in the markets.

Not seasonally adjusted CPI measures The Consumer Price Index for All Urban Consumers (CPI-U) increased 3.5 percent over the last 12 months to an index level of 312.332 (1982-84=100).

Do interest rate hikes hurt the stock market? If the Federal Reserve raises the short-term federal funds target rate it controls (as it did in 2022 and 2023), it can have a detrimental effect on stocks. A higher interest rate environment can present challenges for the economy, which may slow business activity.