Why Earnings Matter Most to the Stock Market Right Now
Thursday’s PCE report was everything investors could have hoped for—it just wasn’t enough to lift the stock market, which opened lower. It’s a reminder that earnings matter more for the market than inflation right now.
September’s PCE reading contained no warnings to investors, who have recently fretted that a rise in bond yields could be signaling a reacceleration in inflation. The headline number came in at 2.1% year-over-year, while core rose 2.7%, right in line with expectations. The odds of a quarter-point rate cut in November ticked slightly higher to 96.07%, from 95.22% on Wednesday.
Inflation, however, isn’t the market’s big concern right now. As those odds suggest, the Fed is almost certainly going to cut again, and it would take a massive surprise in Friday’s payrolls report to change that narrative.
