The mounting concerns about lack of inflation might get intensified this week as a number of key economic indicators will reveal how the prices of goods and services fared in January. But, as long as those Q4 corporate earnings continue to beat estimates, we will likely see equity markets rebounding from recent bearishness.
The declining cost of services in December pushed the producer price index lower in December and further slowed the inflation situation. With rising retail sales figures, this sluggish inflation trend might get reversed in January, but we will need to see a considerable increase in the cost of labor first as it is key to pushing the prices in the services sector. Hence, it will be a critical week for investors.
As there will be no important economic data releases in the first two days of the week, expect volatility to go up after Wednesday. However, consumer goods stocks might turn bullish early in the weeks.
Check out last week’s Market Glance here in which investors focused on Walt Disney’s plans to expand their mobile gaming reach.