S&P 500 Makes Weekly Gains As Inflation Cools: What's Next For The Market?

The S&P 500 is making a strong start to 2023 as yet another key indicator suggests inflation is trending steadily lower.

On Thursday, the Labor Department reported the consumer price index gained 6.5% in December, down from a 7.1% increase in November and in-line with economist estimates. Core CPI inflation, which excludes volatile food and energy prices, was 5.7% in December, also in-line with economist estimates. 

Bitcoin BTC/USD prices briefly topped $19,000 on Thursday for the first time in two months following the encouraging CPI inflation report. Attorneys for collapsed cryptocurrency exchange FTX said this week they have located roughly $5 billion in "liquid" assets, including cash and digital currencies, that could be used to repay FTX customers and creditors.

On Wednesday, Walt Disney announced it rejected billionaire activist investor Nelson Peltz's attempt to join the Disney board of investors, setting the stage for a proxy fight. Peltz said Disney had "lost its way resulting in a rapid deterioration in its financial performance," and his Trian Fund Management aims to work with Disney chief executive Bob Iger to ensure a successful CEO transition by 2025.

Wall Street investment bank Goldman Sachs Group Inc GS is reportedly conducting 3,200 layoffs ahead of its upcoming fourth-quarter earnings report on Jan. 17. Big banks Bank of America Corp BAC, Wells Fargo & Co WFC, Citigroup Inc C and JPMorgan Chase & Co JPM kicked off bank earnings season on Friday with mixed results.

Beyond Belief: Shares of popular "meme" stock Bed, Bath & Beyond Inc BBBY more than tripled this week despite the company reporting a $393-million net loss in the fiscal third quarter and recently warning investors it is exploring a possible bankruptcy filing.

In the week ahead, investors will get more quarterly reports from United Airlines Holdings Inc UAL on Tuesday, Netflix Inc NFLX on Thursday and Telefonaktiebolaget LM Ericsson ADR ERIC and Schlumberger NV SLB on Friday.

Wall Street analysts have lowered their S&P 500 earnings estimates for the fourth quarter by 6.5% since the end of September, according to FactSet.

Economic Numbers: Following the Monday market holiday, investors will get key economic updates on Wednesday when the U.S. Census Bureau releases its December Retail Sales report and on Friday when the People's Bank of China announces its latest interest rate decision.

Photo via Shutterstock.