SOMKID THONGDEE
As the anticipation builds for the U.S. consumer price inflation report for July, investors are bracing themselves for potential shifts in market dynamics. According to a Goldman Sachs advisor, the markets are not only fixated on this imminent data release but are also showing sensitivity towards other economic indicators slated for the week, with concerns about economic growth bubbling beneath the surface.
Goldman Sachs Research is projecting a modest 0.16% uptick in the July core Consumer Price Index (CPI), slightly below the 0.2% consensus, translating to a year-on-year rate of 3.2%, aligning closely with prevailing expectations. The outcomes of this report are poised to influence the Federal Reserve’s forthcoming decisions regarding potential interest rate adjustments, currently anticipated by market participants. However, as highlighted by Dom Wilson, a senior markets advisor at Goldman Sachs, there are additional economic updates on the horizon that warrant attention.
“Given the current apprehension surrounding growth risks, our focus extends beyond the CPI figures to encompass the imminent retail and claims data releases later this week. Our projections for retail performance, which are below consensus, may present a significant hurdle for the ongoing market rally,” remarked Wilson.
Following a period of turbulence triggered by sluggish July U.S. payrolls and a climbing unemployment rate that led to a downturn in stock prices from their record highs earlier this summer, U.S. equities appear to be staging a recovery. The S&P 500 and Nasdaq secured their fourth consecutive gains on Tuesday, while the Dow recorded its third win in four sessions.
“The current market landscape, having rebounded swiftly from extreme conditions, presents a more challenging scenario. Nevertheless, our base-case scenario remains more sanguine compared to the prevailing market sentiment, with an overly pessimistic pricing of recessionary risks relative to the estimations of our U.S. economic team,” Wilson observed.
“Consequently, there is a case for further reassurance over time, although the market may require a period of adjustment before fully embracing this outlook. In the interim, we are likely to witness sustained volatility, particularly in response to upcoming growth-related data releases, including the forthcoming monthly employment reports,” added Wilson.
Investors seeking to monitor market movements through Exchange-Traded Funds (ETFs) could consider options such as (DIA), (DOG), (SPY), (VOO), (IVV), (QQQ), and (SQQQ).