- The CPI inflation report for February is due to come out Wednesday.
- Economists expect it to tick down slightly.
- Oracle and Dollar General are among the key earnings reports that are released this week.
Investors will be focused this week on the Consumer Price Index (CPI), which comes out on Wednesday morning. The leading gauge of inflation has risen for four straight months, reaching 3% in September, the highest inflation reading since last June.
The consensus among economists calls for CPI inflation to decline by one basis point to 2.9% in February, which would end its four-month streak of increases. That 2.9% increase would be over the past 12 months. For the month of February alone, economists anticipate inflation to rise 0.3%, which would be below January’s 0.4% rate.
Core CPI, which excludes food and energy prices, is anticipated to rise some 3.2% year-over-year, which would be the same as January.
Speaking last week in New York, Fed Chair Jerome Powell reiterated his previous stance that the Fed is in no hurry to lower interest rates from their 4.25% to 4.50% level. He outlined the two scenarios that would precipitate a shift in monetary policy.
“If the economy remains strong but inflation does not continue to move sustainably toward 2 percent, we can maintain policy restraint for longer,” Powell said. “If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly.”
Concerns About Tariffs
The markets have been jittery about the Trump Administration’s on-again, off-again tariff threats. But they should not have a major impact on the inflation rates in February since they have now been delayed, for the most part, until at least April.
However, over the longer term, if they are implemented in Canada and Mexico, along with China and perhaps elsewhere, they could impact inflation rates.
“Prolonged tariffs would likely put upward pressure on U.S. inflation, as domestic importers will likely pass part of the increased cost from tariffs on to the consumer,” Angelo Kourkafas, market analyst at Edward Jones, said. “Additionally, retaliatory tariffs, such as those levied by Canada, could have a meaningful price impact on industries such as autos, which have highly integrated supply chains across North America, with parts crossing the border multiple times before final assembly.”
Canada’s new Prime Minister Mark Carney said this week that some of the retaliatory tariffs on the U.S. will not be lifted, but those went into effect in March and won’t impact this CPI report.
Oracle Among Key Earnings This Week
The first quarter earnings season is winding down, but there are still some big names reporting this week. Among them is technology company Oracle (NYSE: ORCL ), which releases earnings Monday after the market closes.
The cloud computing giant recently announced that it is part of a $500 billion project called Stargate to build AI data centers and AI infrastructure. Analysts anticipate earnings of $1.49 per share. Oracle stock is down 7% YTD.
Other noteworthy earnings this week include Dick’s Sporting Goods (NYSE: DKS ) and Kohl’s (NYSE: KSS ) on Tuesday; Adobe (NASDAQ: ADBE ), iRobot (NASDAQ: IRBT ), and American Eagle Outfitters (NYSE: AEO ) on Wednesday; and Dollar General (NYSE: DG ) and Ulta Beauty (NASDAQ: ULTA ) on Thursday.
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