News
A big day for the US economy is coming: what to watch
Michael Nagle/Bloomberg/Getty Images
Pedestrians in front of the New York Stock Exchange (NYSE) in New York on Friday, June 7.
A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.
CNN New York –
Wall Street Is Facing a Rare Double Feature of Economic News on Wednesday, when an inflation report will be released in the morning and the Federal Reserve is expected to announce what it will do with its benchmark interest rate in the afternoon.
What to expect: Investors will look at the May Consumer Price Index report on Wednesday morning, just hours before the Fed announces its monetary policy update. The CPI report and the Fed’s monetary policy meeting have occurred on the same day only seven times since 2014, according to Bank of America. Despite the rare event, the stock market is unlikely to see big swings due to the economic wobble, some investors say.
“Things that could increase volatility would be if Chairman Powell said something unexpected; I think it’s a very low probability,” Dave Sekera, chief U.S. market strategist at Morningstar, wrote in a note on Monday. But if “inflation metrics are much higher than expected, this could lead to a small sell-off. How much the market sells will depend on how above consensus inflation is.”
The central bank is expected to keep rates unchanged this month. Some analysts say the upcoming CPI data will not change the Fed’s June decision unless it shows a huge slowdown or acceleration in inflation. But the metric will still help guide the Fed’s decisions during the second half of the year.
“The number of rate cuts the Fed will actually be able to make this year will depend heavily on the outlook for inflation; if it remains tighter, investors may want to temper their easing expectations for 2024,” Glenmede’s investment strategy team wrote in a Monday note.
Inflation is falling, but the path may be bumpy. Inflation showed signs of cooling in April after remaining worryingly hot during the first quarter of this year. There are also signs that Americans are spending less: a second estimate of gross domestic product, released in May, showed that consumer spending was weaker in the first three months of the year than initially reported. Big retailers are cutting prices to attract price-conscious consumers.
Investors are looking to the May CPI for clues as to whether the cooling in the April CPI report was a blip. Other metrics have already suggested that inflation is still taking some time to come down. The April Personal Consumption Expenditure Index, the central bank’s preferred inflation indicator, showed that the US economy made little progress keeping costs under control. US home prices are at record levels. Used and new car prices are still high, as are insurance, repair and maintenance costs.
The most recently employment report released Friday revealed that the US economy added a staggering 272,000 jobs in May. The combination of persistent inflation and strong job growth has led Wall Street to lower its expectations for rate cuts this year. Traders expect just one or two cuts in 2024, according to the CME FedWatch tool.
The Fed on Wednesday will release its latest projections for the direction it expects rates to take in the future and, more importantly, how many times it expects to ease rates in 2024. Although the central bank has maintained its forecast of three rate cuts so far This year, that could change – and potentially become the final set of projections for 2024.
“If most [Federal Open Market Committee] participants assume only one 25 [basis point] If a rate cut this year is appropriate, there appears little chance of obtaining enough data in time to lead back to a rate cut in July or September,” UBS economists wrote in a Friday note.
Americans are feeling more optimistic about their finances, the stock market and declining inflation
Presidential election polls may show that some Americans have mixed, if not downright bitter, opinions about the economy in general – but when it comes to how they view their own finances, things are looking pretty good, my report reports. colleague Alicia Wallace.
North American consumers are more optimistic about their current and future financial situation, the stock market and the slowdown in inflation, according to survey data released on Monday by the Federal Reserve Bank of New York.
The New York Fed’s May Consumer Expectations Survey revealed an improvement in people’s perceptions of their current financial situation, as well as their outlook for the year ahead. The percentage of respondents who said their financial situation was better than in May 2023 was at its second highest level in more than two years, while the positive percentage for the following year reached its highest level in almost three years.
Monday’s survey also showed improved optimism outside the domestic sphere: namely, consumers believe that the good times in the markets could continue. Household expectations regarding higher US stock prices improved to a three-year high.
In terms of the job market, the latest survey was a bit mixed.
Rural US hospitals continue to be attacked by cybercriminals. Microsoft and Google are working to fix this
Microsoft and Google will offer free or discounted cybersecurity services to rural hospitals in the United States to make them less vulnerable to cyberattacks that have disrupted patient care and threatened lives, the White House and these tech companies said on Monday.
Microsoft said in a statement to CNN that it would provide free security updates to eligible rural hospitals, as well as security assessments and training for hospital employees. Google will provide free cybersecurity consulting to rural hospitals and begin a pilot program to match the company’s cybersecurity services with the needs of rural hospitals.
The country’s roughly 1,800 rural community hospitals are among the most vulnerable to dangerous ransomware attacks because they often lack IT security resources and trained cybersecurity personnel, my colleagues Sean Lyngaas and Michelle Watson report. And they may be the only hospitals within a radius of dozens of kilometers, which means that a ransomware attack that prevents a hospital from accepting ambulances could put patients’ lives at risk.
The new announcement is the result of private discussions between technology companies and officials on the White House National Security Council, which is increasingly concerned about cyber threats to hospitals. It’s an effort to use the broad reach of software from Microsoft and Google, which is used in hospitals across the United States, to help fill a gap in healthcare defense.