By Sue Chang and Chris Matthews, MarketWatch

CPI data show muted inflation

U.S. stocks fell Thursday, on track to snap a five-day streak that helped to drive the Dow and the S&P 500 out of correction territory, at least by one measure. But for the week, major indexes are poised for strong gains.

How did major benchmarks fare?

The Dow Jones Industrial Average fell 55 points, or 0.2%, to 23,946, while the S&P 500 index slipped 3 points, or 0.1%, to 2,593. The Nasdaq Composite Index shed 19 points, or 0.3%, to 6,967.

For the week, the Dow has risen 2%, the S&P 500 2.2%, while the Nasdaq has advanced 3.3%.

Read:The stock market just got off to its best start in 13 years (http://www.marketwatch.com/story/the-stock-market-just-got-off-to-its-best-start-in-13-years-2019-01-10)

What's driving the market?

Investors have taken solace in speeches by Federal Reserve officials as they continue to spread the message that the central bank will be cautious in its approach to raising interest rates this year.

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be "flexible" and "patient" on the monetary policy.

Latest data showed muted inflation with the consumer-price index slipping 0.1% in December to mark the first decline in nine months, the Labor Department said Friday. That matched the forecast of economists polled by MarketWatch. The increase in the cost of living over the past 12 months slowed to 1.9% from 2.2%, the first time it's fallen below the key 2% mark since August 2017.

Investors could also be getting incrementally good news on the U.S.-China trade front, after U.S. Treasury Secretary Steven Mnuchin told reporters Thursday night that Vice Premier Liu He, the most senior economic policy adviser to President Xi Jinping, would travel to Washington later in January (http://www.marketwatch.com/story/chinas-top-trade-official-expected-to-visit-us-for-trade-talks-mnuchin-says-2019-01-10) to continue trade negotiations, talks that have been seen by markets as gaining momentum this week.

Meanwhile, the partial U.S. government shutdown entered its 21st day, tying the record for the longest in history. While markets have so far shrugged off the drama in Washington, hundreds of thousands of federal workers won't receive paychecks this week, and economists warn that the economic effects of the shutdown could grow significant as the standoff drags on.

What are the analysts saying?

Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management, told MarketWatch that weakness in equities Friday morning should not shake confidence in what he sees as a sustainable rally going forward.

"We've clawed back from the December downturn, which was disconnected from economic reality," he said. "With inflation not rising convincingly above 2%, markets are right to think that the Fed will be their friend," he said, adding that Friday's subdued inflation reading will give the central bank even more reason to take the patient approach Powell has outlined in recent speeches.

"Stocks are loving that central bank policy appears to be in an ultra-dovish mode," wrote Edward Moya, chief market strategist at Oanda, in a note. "Inflation is low and under control and the main catalyst for the Fed's ability to be patient. If we see softer prints, we could see yields drop and stocks continue their rally."

Which stocks are in focus?

Shares of Netflix Inc. (NFLX) rose 4.4% after the firm was upgraded to strong buy from outperform at Raymond James.

Chico's FAS Inc. (CHS) advanced 5.8% after the firm announced the closure of 250 stores (http://www.marketwatch.com/story/chicos-fas-to-close-250-stores-in-us-over-three-year-period-as-part-of-digital-expansion-2019-01-11), as part of an overhaul, with the aim of improving its online offering and customer service.

Activision Blizzard Inc. (ATVI) fell 10% after the firm announced (http://www.marketwatch.com/story/activision-blizzard-cuts-ties-to-destiny-studio-2019-01-10) that it was ceding rights to the "Destiny" franchise to Bungie Inc. Following the move, Benchmark cut its price target on the stock from $93 to $87, and KeyBanc Capital slashed its price target from $80 to $64.

Shares of General Motors Co. (GM) rose 8.9% after the auto maker said it expects 2018 earnings (http://www.marketwatch.com/story/gms-stock-surges-after-upbeat-profit-outlook-2019-01-11) and adjusted free cash flow to beat expectations and provided an upbeat 2019 outlook.

Yum Brands Inc. (YUM) is down 1.7%, after the KFC and Pizza Hut parent was downgraded from neutral to sell by Goldman Sachs.

Shares of Starbucks Corp. (SBUX) also fell 2% after Goldman Sachs downgraded the stock to neutral from buy.

How are other markets trading?

Markets in Asia rallied (http://www.marketwatch.com/story/fed-restraint-trade-hopes-bolster-asian-markets-2019-01-10) with Japan's Nikkei closing 1% higher, while Hong Kong's Hang Seng Index added 0.6%, and China's Shanghai Composite advanced 0.7%.

In Europe, stocks edged higher (http://www.marketwatch.com/story/european-markets-up-despite-latest-auto-and-retail-woes-2019-01-11), with the Stoxx Europe 600 edging up 0.1%.

Crude oil is lower, threatening to end its nine-day winning streak (http://www.marketwatch.com/story/oil-prices-lifted-for-10th-day-as-dollar-softens-2019-01-11) Gold prices firmed, while the U.S. dollar (http://www.marketwatch.com/story/british-pound-climbs-as-likelihood-of-brexit-delay-rises-2019-01-11) was flat.

(END) Dow Jones Newswires

January 11, 2019 13:18 ET (18:18 GMT)