2-13-24-SPY

Chart: SPY 1-year daily

The HCM-BuyLine® remains strong. The markets were overbought, and a pullback was warranted. The CPI number was just the nudge the market needed to cool things off a bit.

The Labor department CPI showed a 0.3% rise in prices vs. the 0.2% increase expected. The year-over-year number rose to 3.1% vs. the 3.0% projected. The January core number, which strips out food and energy, increased 0.4% vs. the 0.3% forecast. On an annual basis, prices rose 3.9% vs. the 3.7% prediction.

Stocks felt the impact. The Dow declined 1.2% in the first hour of trading on Tuesday. The S&P 500 also pulled back 1.37% on the stock market today, sending the benchmark index back below the 5,000 level.

The Conference Board’s CEO Confidence Index rose seven points in Q1 to 53, above 50 for the first time in two years, indicating growing optimism among executives. Both current conditions and expectations for the year ahead improved. CEOs had a net positive assessment not only of the broad macro economy but also of conditions in their own industries.

Despite the more positive economic outlook, hiring plans for the next 12 months declined. The share of CEOs who plan to lay off workers jumped to 23% from 13% in the previous quarter, while those who plan to grow their workforce slipped to 35% from 38%. The report attributed this net decline in hiring plans to be letting up of labor hoarding that characterized most of last year. It suggests a moderation in labor demand and easing in labor market conditions in 2024. Within the context of a continued economic expansion, however, this implies sustained productivity gains, and is a tailwind to profit and margin growth.

In special questions, CEOs identified political uncertainty ahead of the U.S. presidential election as their main challenge this year. Global downside risks included the spread of current wars, deglobalization, and U.S.-China tensions. Upside risks included falling inflation, Fed rate cuts, and a resolution to current geopolitical conflicts.