Friends
For the first time in four years, we saw the monthly inflation rate fall as the Consumer Price Index was negative 0.1% in June. We have seen the rate of increase in prices falling for a while now, but this is the first time we actually saw prices come down. Remember when they say inflation has fallen from 9% to 3% over the past couple of years it still meant that prices were going up- just at a slower pace. The markets had a wide array of responses to the news. The tech darlings fell while old stodgy value stocks rose. The big winner was small cap stocks, ones that would be most aided by a drop in interest rates. And speaking of interest rates, bonds rallied which of course means that yields fell today as would be expected. Does the Fed now have a clear path to begin to lower rates in September? It is becoming more and more likely.
As for today, by the close the Dow Jones Industrial Average was up 32 points to finish the day at 39,753. The S&P 500 was down 49 points to close at 5,584. The Nasdaq Composite Index was down 364 points to close at 18,283. Gold was up $41 to trade at $2,421 per ounce, while oil was up $.91 to trade at $83.01 per barrel WTI.
As mentioned, all signs point to Fed easing later in the year. Maybe this will bring on a wider participation and broadening which I think would be good for the markets as a whole. We will see. In the meantime, let’s see how the week finishes out tomorrow.
Have a nice evening everyone.
