US equities (^DJI, ^IXIC, ^GSPC) are higher intraday on Monday ahead of this week's CPI (Consumer Price Index) inflation print. JPMorgan Chase & Co. (JPM) CEO Jamie Dimon's letter to shareholders outlined his causes for concern around elevated inflation and interest rates from the Federal Reserve.

Tim Murray, T. Rowe Price Capital Markets Strategist — Multi-Asset Division, discusses the outlook of the stock market as the Fed gradually cuts rates this year if officials choose to do so.

The Fed "would like to be cutting but they just need some evidence that inflation is going to be continuing to come down. Maybe we do get some surprises there over the next couple of months. We've had negative surprises in January and February, we could have positive surprises over the next couple of months," Murray tells Yahoo Finance. "But absent those positive surprises, I think there's a really good chance that the Fed is stuck on hold, maybe even until the end of the year."

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Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

- Stocks flat to start the week. Investors caught between last week's jobs report and CPI and earnings starting this week. Tim Murray is capital markets strategist in the Multi-Asset Division at T. Rowe Price, and he joins us now. Tim, let's start by looking ahead to this week's inflation data. Jamie Dimon warning today on the risks inflation is stickier than expected. That could keep rates elevated. Now, last year markets got pretty comfortable with the idea that inflation had a one-way ticket back to 2%. How have you looked at this year's data, those January and February readings? Do they upset that idea as far as you see it?

TIM MURRAY: Yeah, I think they really do. I would agree with what Jamie Dimon said. It looks sticky from here. I think the important thing when you look at inflation prints is to understand the underlying components of inflation. So essentially, if you think about it, you've got services inflation, and then you've got goods inflation. When we were at 9%, you know, back in June of 2022, the contribution to that was 6% from goods inflation and 3% from services inflation.

Now we are at 3% inflation, and all of that is services inflation. We had goods go from a 6% contribution to nothing. And, I mean, what that tells you is that it's all about services from here. And I can tell you that all that improvement from goods, that was supply chains normalizing. The improvement from here that's going to come from services, that's going to have to come from services, that's going to be way harder simply because services inflation is just very sticky. It's very dependent on wage growth getting lower. It's dependent on housing prices getting lower.