Friends
Today’s CPI release showed year over year inflation at 8.5% at the consumer level. Now, that sounds bad, and it is, but the silver lining might be that on a month-to-month basis the core inflation number (which excludes food and energy) was up .3% which is the lowest since last September. At that pace inflation would be moderating to about a 4% pace. It appeared that market participants were seeing the brighter side of the picture in early trading as stocks and bonds both rallied. But the realization that none of today’s data really changes anything with regards to Fed monetary policy – the pace of rate hikes or the pace of quantitative tightening- got traders to thinking it might be best to sell the rally.
By the close, the Dow Jones Industrial Average was down 87 points to finish the day at 34,220. The S&P 500 was down 15 points to close at 4,397. The Nasdaq Composite Index, which was up over 2% at one point this morning ended down 40 points to close at 13,371. Gold was up $23 to trade at $1,971 per ounce, while oil was up $6.14 to trade at $100.43 per barrel WTI.
A weak bond auction and rising oil prices didn’t help the bulls case as the trading session unfolded today. Yes, earnings season will begin tomorrow, but inflation and the Fed is front and center in the minds of market participants at the moment. We’ll see if Corporate America’s report card makes things better or worse in the coming weeks. Stay tuned.
