Stock Market News: Dow Opens Down
After two months of solid improvements, consumer sentiment seemed to hit a lull in February.
Preliminary results from the University of Michigan’s consumer sentiment index show that sentiment ticked up to 79.6 from 79 in January. The reading was a hair below expectations for a reading of 80, according to FactSet – but still 19% above last February’s reading.
“The fact that sentiment lost no ground this month suggests that consumers continue to feel more assured about the economy, confirming the considerable improvements in December and January across various aspects of the economy,” said Joanne Hsu, director of consumer surveys at the University of Michigan. “Consumers continued to express confidence that the slowdown in inflation and strength in labor markets would continue.”
That said, inflation expectations for the year ahead inched up to 3% from 2.9% in January, reflecting some of the last-mile challenges the Federal Reserve is facing in bringing inflation back to its long-term target of 2%.
Inflation rose by 3.1% on an annual basis in January. While that marked a deceleration from the 3.4% pace set in December, it was a higher reading than many economists expected.
Long-term inflation expectations, however, remained at 2.9% for the third straight month, suggesting consumers are confident that prices will keep trending lower.
Markets were lower Friday, weighed down by the lackluster consumer sentiment report and a hotter-than-expected producer-price index reading.
“The report should be good news for markets and the Federal Reserve, but will probably not be enough to undo the negative expectations due to the recent CPI and PPI reports showing higher than expected inflation in January,” wrote Eugenio Aleman, chief economist at Raymond James.