Investors in the Driver’s Seat: A Week That Could Chart the Course for 2024’s Financial Markets

The upcoming week is poised to be a crucial juncture with several significant events that could shape the course of various markets. Despite an uncertain start for stocks in 2024, the first full trading week of the new year is expected to establish a definitive tone for the months ahead.

Central to this narrative is the lingering question of inflation’s trajectory and its influence on the Federal Reserve’s potential actions in 2024. The release of December’s consumer-price index on Thursday, followed by the producer-price index on Friday, holds the potential for market-altering developments.

Projections indicate a modest 0.2% rise in the consumer-price index, with a corresponding increase in the closely watched core rate. While not a dramatic shift, it could nudge the year-over-year headline figure to 3.3%, posing challenges to recent efforts in curbing inflation.

In contrast, the year-over-year core rate might see a slowdown to 3.8% from the previous 4%.

Beyond the realm of inflation, the week’s events will provide valuable insights into the resilience of the American consumer and the potential for a “soft landing” in the broader economy. These outcomes are pivotal in maintaining the favorable “Goldilocks” backdrop that propelled the stock market to nine consecutive weekly gains before the turn of the calendar.

Earnings season is set to unofficially commence with reports from JPMorgan Chase & Co. and Delta Air Lines on Friday, followed by major Wall Street banks in the subsequent week. Analysts are anticipating a cautious outlook for the year ahead, given the downward revisions in S&P 500 earnings growth estimates for Q4.

The Consumer Electronics Show (CES) in Las Vegas, starting on Tuesday, is anticipated to showcase developments in artificial intelligence, mobility, and healthcare. Once primarily focused on gadget unveilings, the CES now symbolizes the pervasive influence of technology in modern life, especially with the emphasis on integrating AI into new products.

Against this backdrop, the cryptocurrency landscape remains under scrutiny. Following a remarkable performance in 2023, the Securities and Exchange Commission faces a pivotal decision on spot-bitcoin ETF applications by Wednesday. Widely expected approval could significantly impact the adoption of bitcoin as an investible asset, particularly among institutional and retirement assets.

This decision coincides with bitcoin trading just above $47,000, reflecting notable gains in the new year and a remarkable 180% surge over the past 12 months, albeit still below its all-time high in November 2021.