‘I think earnings can hang in there’

S&P 500 is trading down on Friday after the U.S. Bureau of Economic Analysis said the core personal consumption expenditures price index was up more than expected in January.

Pro reacts to the inflation data

On a year-over-year basis, the Fed’s preferred inflation gauge was up 4.7% versus a 4.4% increase expected.

Today’s data creates more room for the central bank to further lift rates that keeps the recession debate in play. Still, Hightower’s Stephanie Link is keeping somewhat positive on the equities market.

I’m encourage that there’s so many bears out there. There are so many people that are negative especially on the economy, especially on earnings and I just don’t see it.

For the month, the core PCE was up 0.6% also ahead of expectations for a 0.5% increase.

Link shares her take on earnings

Earlier this week, the Bureau of Economic Analysis also said the U.S. economy grew at an annualised pace of 2.7% in the final quarter of 2022. On CNBC’s “Squawk Box”, Link added:

I’m not saying we’re of to the races. I’m just saying the economy is in better shape. There’s more underlying momentum that it’s getting credit for. I think earnings can hang in there. Excluding tech, earnings are up 6.5%.

Spending was up 1.8% while income increased 1.4% in January – both ahead of estimates.

Data from CME Group now signals an increased likelihood of a 50 basis points increase in interest rates next months. For the year, the benchmark index is currently up more than 3.0%.