Mon Sep 09 15:10:15 UTC 2024: ## Stocks Rebound on Dip Buying, Eyes on Inflation Data
**New York, Sept. 11, 2023** – US stocks surged on Monday, recovering from last week’s selloff fueled by economic concerns. Traders are now looking to this week’s inflation data for clues on the Federal Reserve’s rate cut plans.
The S&P 500 closed up 1.2%, with all major sectors contributing to the rebound. Megacaps like Nvidia and Tesla led the gains, while Apple introduced the iPhone 16, designed for artificial intelligence, but its shares closed near unchanged after an earlier dip.
“We’re seeing mostly technical dip-buying,” said Tom Essaye of The Sevens Report. “Economic growth is clearly losing momentum, but a soft landing remains more likely than a hard landing. This week’s focus turns back to inflation.”
Treasury yields saw slight movements, with the likelihood of a 50-basis-point rate cut at the Fed’s September meeting reduced to 20% from 50% last week. However, some options traders are wagering on a larger easing by December or March.
Analysts remain cautious, with Citigroup strategists highlighting the possibility of further declines in major indexes following last week’s selloff. They cite large unwinds of long positions and the shrinking exposure of hedge funds in the S&P 500, suggesting a growing bearish sentiment.
Despite the volatility, HSBC strategists are adding to their overweight position on US stocks, citing a resilient third-quarter earnings outlook and a labor market showing signs of cooling rather than a looming recession.
The key event this week will be Wednesday’s release of the Consumer Price Index (CPI) for August. Economists are expecting a year-over-year increase of 2.6%, the lowest since 2021. This data will influence the Fed’s decision on the size of its rate cut.
“Inflation matters,” said Chris Low of FHN Financial. “Weaker numbers might encourage the Fed toward a 50-basis-point cut, while anything higher could lock in 25 basis points. As it is, though, even if inflation is benign and some participants push for a bigger cut, we expect the Fed to land on a quarter point for a first step.”
While the near-term outlook for the stock market remains uncertain, some analysts remain optimistic about the long-term prospects. UBS Global Wealth Management expects S&P 500 companies to grow earnings by 11% this year and 8% in 2025.
“History suggests that the Fed’s success in piloting a soft versus hard landing will play a key role in dictating the path for US equities,” said Seema Shah of Principal Asset Management.
The coming weeks will see a flurry of economic releases, including US initial jobless claims, PPI, Eurozone industrial production, and Japan industrial production, all of which could influence investor sentiment and the stock market’s direction.
First Piper 