WEEKLY SUMMARY: Stocks mixed on positive US data surprises
US equities ended mixed as investors weighed some healthy growth and profit signals against worries that inflation trends might surprise on the upside. Fears that the Fed would need to raise short-term interest rates more than previously expected caused US Treasury yields to increase and fostered a rise in the U.S. dollar, taking an especially large toll on oil prices and energy stocks. US CPI rose 0.5% in January, as expected, versus a revised 0.1% increase in December. A “sticky” increase in shelter prices accounted for nearly half of the gain. On a year-over-year basis, the inflation rate came in at 6.4%, higher than expected but the slowest pace since October 2021. Annual core (less food and energy costs) inflation was 5.6%, also modestly above expectations but its slowest pace since December 2021. US stocks fell on Thursday, however, after PPI surprised on the upside. The producer price index rose 0.7% in January, its biggest gain since June. The US 10-year yield rose to a three-month high on Friday morning before decreasing a bit to end the week. Shares in Europe rebounded as better-than-expected corporate results helped markets shrug off fears about additional interest rate hikes. Chinese equities fell for a third consecutive week as concerns over escalating geopolitical tensions with the U.S. hampered prospects of faster economic growth. Bitcoin rallied over 12% on the week, topping $25k intraday - the highest since June 2022.