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Why stocks aren’t down even more on Friday’s hot inflation report


S & P 500 futures dropped nearly 60 points at 8:30 a.m. ET on the hotter-than-expected producer price index figures . But futures quickly came off the lows when investors thought twice and realized that, while up 7.4% year over year was slightly above the 7.2% expected, it is still trending in the right direction, which is down. It hit a high of 11.66% in March, and was 8.1% in October. Will this data point suddenly make the Federal Reserve raise 75 basis points next week, versus the 50 basis point hike expected? (1 basis point equals 0.01%.) “I don’t think this has any bearing on what the Fed will do” next week, Megan Greene, chief economist at the Kroll Institute, said on CNBC’s “Squawk Box” Friday morning. “I think peak inflation is probably behind us.” The dollar, which has been in a notable downtrend for the last month, rallied initially, then fell back. Two and 10-year Treasury yields spiked modestly but are off their highs. No earnings apocalypse in 2023? That seems to be the theme from a Bloomberg survey of 134 fund managers. The managers collectively expect earnings to rise by an average of 10% next year (71% expected earnings to rise). That’s well above analyst consensus of a roughly 5% gain. Most traders seem to be expecting earnings to be flat at best. Many strategists are far more negative. Blackrock, in a pessimistic 2023 outlook, said “We find that earnings expectations don’t yet price in even a mild recession.” Overnight earnings were decent. Broadcom beat on top and bottom line thanks to strong demand. DocuSign posted a big beat, and RH beat as well, though CEO Gary Friedman was somewhat downbeat, saying “We expect our business trends will continue to deteriorate as a result of accelerating weakness in the housing market over the next several quarters…”

Jim Cramer’s top 10 things to watch in the market Friday

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