MARKETS TODAY
Sept 13 (Vica Partners) – Dow down 2.30%, S&P 500 down 2.63%, Nasdaq down 3.37%
In August, the Consumer Price Index increased 0.1 percent, seasonally adjusted, and rose 8.3 percent over the last 12 months. The index for all items less food and energy increased 0.6 percent in August; up 6.3 percent over the year.
Core CPI increases were mostly offset by a decline in the gasoline index
Increases in the shelter, food, and medical care indexes were the largest of many contributors to the broad-based monthly all items increase. These increases were mostly offset by a 10.6-percent decline in the gasoline index.
https://www.bls.gov/news.release/cpi.nr0.htm
Even though the Consumer Price Index (CPI-U) only rose 0.1 percent in August the market was betting on a drop
Top line message is that inflation data out this morning indicates price pressures continue Markets makers had anticipated a slight CPI decrease that would have set off market rally today.
Traders now considering a 100 bps rate hike next week
With the new numbers out this morning, central bankers will remain hawkish with expectations that the Federal Reserve could deliver a +1pt interest-rate increase next week.
Treasury yields up after CPI inflation data exceeds market expectations
U.S. Treasury yields are up Tuesday after higher than expected inflation data disappoints the market. In morning trading, the yield on the benchmark 10-year U.S. Treasury note was 3.45%, up from 3.29% before inflation data was released.
Solid strategy for these type of market days ….
We suggest investing in companies that have solid balance sheets and offer dividends.
Best to continue to “cost average/ buy value stocks on rough market days. Resist most all tech and growth stocks where companies have negative margins. Our teams still see a -10% further valuation correction with deep margin compression for these type of “cash poor” speculative stocks.
