Stocks Have Running Room as Optimism Emerges: Josh Brown

The stock market has room to run as investors adjust portfolios after a rough 2022 and show some optimism about the new year, according to Ritholtz Wealth Management CEO Josh Brown.

“December was a trash fire so I still think a lot of what we’re seeing here is the end of tax-related selling pressure coming off and just a little more optimism about the year to come,” Brown said Wednesday on CNBC’s “Closing Bell: Overtime,” commenting on 2023′s early stock market rally.

“I think everybody fully understands what the headwinds are at this point, there’s been a ton of pessimism now for six months, nobody is predicting anything specifically great for either the economy or for earnings, so that gives you room to move up and I think it gives you even more room if we get continued confirmation that the Fed is getting its way,” he said.

Brown’s comments came the day before the federal government released December consumer price data showing inflation continuing to cool, in line with economists’ expectations. Stocks rallied again Thursday, with the data potentially signaling the Federal Reserve will soften its program to fight inflation by raising interest rates.

The Consumer Price Index will be market-moving and something investors will need to focus on every month as long as the Fed continues its rate-hiking cycle, Brown said, correctly predicting Thursday’s data would move markets even if it came in as expected.

”This is not one of those data points that I’m willing to dismiss,” he said, noting that much data has been moving in the direction the Fed wants.

The CPI slipped slightly from November’s level, while prices rose 6.5% year over year, the lowest inflation number in more than a year.