Friends
Market participants were wondering if today’s Consumer Price Index release would show that inflation is peaking. Well, the easy answer is no, not really. Yes, we have seen commodity prices fall in recent weeks, but headline inflation is still running hot with today’s CPI showing a 9.1% year-over-year increase. That’s the highest reading since 1981. Things like housing costs and wages are not backing off yet, but it is important to remember that the drop in gasoline prices is not yet fully reflected in the June number. Peaking is a process evidently.
Stocks sold off early, recovered most of those losses, then fell again towards the close. For the day, the Dow Jones Industrial Average was down 208 points to close at 30,772. The S&P 500 was down 17 points to finish the day at 3,801. The Nasdaq Composite Index was down 17 points to close at 11,247. Gold was up $7 to trade at $1,731 per ounce, while oil was basically flat at $95.90 per barrel WTI.
On the bright side given the hot CPI number, it is a little surprising that stocks did not sell off further. The market now believes that the Fed will surely go at least 75 basis points at this month’s FOMC meeting, and likely another 75 basis points in September. Just last week the narrative was that the Fed might not have to go as aggressively as had been previously believed. So much for that.
