The S&P 500 managed a gain of 0.5% and avoided its sixth-straight day of losses, but the action was anemic, as investors await Friday morning's producer price index report. Breadth was better at around five gainers for every three losers, and there were some better pockets of momentum, but the indexes were unable to build on early strength and closed near the low end of the day's action.
It is probably a good sign that there wasn't a rush to load up in front of a potentially soft PPI report. The consensus view now is that consumer-related inflation has peaked, but there is still a sizable risk that PPI and consumer price index could come in higher than expected. Even those bulls that believe CPI has topped out are still worried that it may remain sticky to the upside for a while.
The bigger problem for the market at this point is that the main focus of concern is shifting to employment and recession. The inflation issue was the obsession for many months, but with the Fed slowing down its hawkishness and some downtrend in CPI, that matter is no longer at the forefront.
Regardless of how PPI and CPI turn out, the most important issue on the docket will be the comments from Fed Chair Jerome Powell after the Fed interest rate decision. The market will be focused on Powell's comments about employment. He made it clear in his last speech that was the main concern, but this market doesn't always seem to pay much attention to what the Fed is hinting at.
Have a good evening. I'll see you tomorrow.
