Stocks rise to cap another winning week

Investors turn their focus to next week’s CPI reading

On Tuesday, investors will digest one of the most important data points the Fed will consider in its next interest rate decision: the October Consumer Price Index (CPI).

The report is expected to show headline inflation at 3.3%, a slowdown from September’s annual price increase of 3.7%, according to Bloomberg estimates. Over the previous month, consumer prices are expected to rise 0.1% in October, a slower rate than the 0.4% monthly increase in September.

Lower energy costs are likely to have made the headline numbers yield smaller gains.

On a “core” basis, which excludes the more volatile costs of food and gas, prices in October are expected to rise 4.1% from a year ago — consistent with the year-over-year increase seen in September, according to Bloomberg data. Monthly core prices are expected to rise by 0.3%, which is also in line with the monthly rise in September.

“The weak increase in October’s core CPI is likely to be overshadowed by another strong reading in the core,” Wells Fargo wrote in a note ahead of the report’s release.

The bank said the core CPI was likely to indicate “slower progress in inflation,” adding: “While the decline in housing inflation is likely to resume in October, the steady withdrawal from health insurance is set to turn into a boost with this month’s release.” “It is likely that the commodity contraction has paused.” “.

The Wells Fargo team expects the core CPI to still rise about 3% annually by this time next year, noting that “slowing inflation in the coming months does not necessarily mean a victory over inflation.”