Wharton's Jeremy Siegel. Scott Mlyn/CNBC/NBCU Photo Bank/NBCUniversal via Getty Images
Jeremy Siegel stated that the August US Inflation Print will be more important than the monthly Jobs Report.
He stated that if they exceed the numbers, the Fed will have to be more aggressive moving forward.
Professor Wharton said that long-term returns will not be as strong as they were in the past decade.
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Although stocks in the US may be on a bullish market, investors should pay more attention to the next US inflation print than Friday's jobs report, according to Wharton professor Jeremy Siegel, CNBC.
Investors are currently focused on the Fed's next move as a potential catalyst to a pullback within the US stock market, which has experienced a string of record highs.
Siegel cited an old Wall Street expression to describe the rapid slide that occurs when stocks are not climbing steadily: "Up the stairs, down an elevator."
He said, "We're going to the staircase," on Thursday's CNBC's "SquawkBox." "I don’t know when the elevator’s going to arrive. It looks like a momentum trade in that it keeps going up every day. There is no real news to drive it, and there are many momentum players who keep adding to the pile.
Siegel stated that long-term returns will not be as strong as they were over the past decade.
After growing steadily over the past year, US stock markets are now trading at new record highs. The benchmark S&P 500 index is now almost 20% higher than last October and has not seen a drop of more that 5% since October.
As equity markets have been supported by massive Fed-era pandemic-era stimulus measures, traders are trying to find clues about the next steps of the central bank, which could be what causes those markets turn.
Jerome Powell, the Fed Chairman, indicated last week that the US economy might not require the same level of monetary support it received during the heights of the pandemic.
For information about the economic recovery, traders will be closely watching Friday's August nonfarm payroll report from Labor Department.
However, Siegel stated that he believes the August inflation reading will outweigh the August jobs report in terms of their impact on the markets.
He said that he believes the inflation news (not tomorrow's employment report) is more important than any other. "If they blow out their numbers, the Fed will have to be more aggressive moving forward."
The Consumer Price Index, one of the most widely used US inflation measures, rose 0.5% in July. This level was in line with economist predictions and marked a sharp decline from June's 0.9% pace. This measure rose 5.4% year over year, which is still the highest level since 2008 but remains flat from June's levels year-on-year.
Powell stated that it is likely that inflation will slow down as supply chains heal, and demand declines.
On September 14, at 8:30 AM, the inflation reading for August will be published. ET.
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