In a day where the markets needed to absorb the new technical change to US interest rates, riskier assets were able to hold up and continue higher. The S&P 500 Index closed higher for the 4th straight day edging up 2.5 points or .22%. The dollar was mixed but was still able to show strength against the Euro and the Pound. The S&P 500 Index tested the 50 day moving average for the first time in 20 trading sessions.
In economic news, the Euro currency area’s flash composite purchasing managers’ index, a measure of private-sector output based on about 85% of replies from a monthly survey of companies, was unchanged from January at 53.7. A reading above 50 indicates output is growing, while a reading below shows it is contracting. The expectations were for a reduction of the index to 53.
In US news, U.S. consumer prices barely rose in January from the previous month and core inflation fell for the first time since 1982. The seasonally-adjusted consumer price index rose 0.2% last month on the back of higher energy prices, according to the Labor Department, the same increase as in December 2009.
Core consumer prices, which strip out volatile energy and food items and are more closely watched by the Fed, fell by a monthly 0.1% in January. The last time core consumer prices fell was in December 1982. In December 2009, the core CPI had risen by a monthly 0.1%. Expectations were for an increase of 0.3% in the headline consumer price figure and of 0.1% in the core consumer price index number. On an annual basis that is not adjusted for seasonal factors consumer prices rose by 2.6% in January. Core consumer prices rose by 1.6% from 12 months ago. The small increase in consumer prices, which were in contrast to the rise of producer prices earlier in the week, will ease concerns of a rate rise due to inflationary pressures.