{"id":60685,"date":"2023-09-13T22:11:58","date_gmt":"2023-09-14T02:11:58","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/for-stocks-this-was-the-worst-part-of-inflation-report-says-first-trust\/"},"modified":"2023-09-13T22:12:01","modified_gmt":"2023-09-14T02:12:01","slug":"for-stocks-this-was-the-worst-part-of-inflation-report-says-first-trust","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=60685","title":{"rendered":"For stocks this was \u2018the worst part\u2019 of inflation report, says First Trust"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002502259\" role=\"document\">\n<p>Major U.S. stock benchmarks remained down for the month on Wednesday, after a choppy trading session ended with mixed results as investors weighed the latest inflation report.<\/p>\n<p>\u201cThe Federal Reserve may have gained some traction against inflation, but the inflation problem is far from finished,\u201d said First Trust economists in a note Wednesday. \u201cThe worst part of today\u2019s report was that real average hourly earnings declined 0.5% in August, taking a large bite out of consumer spending power.\u201d<\/p>\n<div class=\"paywall\">\n<p>Stock-market investors will get an update on the health of the consumer on Thursday morning, with U.S. retail sales data due out before the market\u2019s open. The First Trust economists said that equity investors should stay \u201cvigilant as we navigate these unprecedented times,\u201d while cautioning that they still expect that \u201ca recession is on the way.\u201d<\/p>\n<p>The Bureau of Labor Statistics said Wednesday that U.S. inflation rose 0.6% in August, as measured by the consumer-price index, and climbed 3.7% in the past 12 months as the year-over-year rate accelerated from 3.2% in July.\u00a0<\/p>\n<p>\u201cWe\u2019re nowhere near\u201d the 2% inflation rate targeted by the Fed, said Bob Doll, chief investment officer at  Crossmark Global  Investments, in a phone interview Wednesday. He worries that \u201cinflation is coming down too slow.\u201d\u00a0<\/p>\n<p>Core inflation, which excludes energy and food prices, increased 0.3% last month, CPI data showed, which was slightly hotter than the forecast from economists polled by Wall Street. Still, the year-over-year rate eased to 4.3%, from the 4.7% rise over the 12 months through July.\u00a0<\/p>\n<p><strong>Read:<\/strong> CPI shows biggest increase in U.S. inflation in 14 months<\/p>\n<p>\u201cThe Fed\u2019s battle against inflation is not over, and a deeper dive under the inflation hood confirms this,\u201d the First Trust economists said.<\/p>\n<p>\u201cRental inflation \u2013 both for actual tenants and the imputed rental value of owner-occupied homes \u2013 continues to run hot, up 0.4% for the month and running above a 5% annualized rate over three-, six-, and twelve-month timeframes,\u201d they wrote.\u00a0<\/p>\n<p>\u201cMeanwhile, a subset category of inflation that the Fed is watching closely \u2013 known as the \u2018Super Core\u2019 \u2013 which excludes food, energy, other goods, and housing rents, rose 0.4% in August and is up 4.0%\u201d in the last twelve months, according to the First Trust note.\u00a0<\/p>\n<p>Considering the U.S. labor market\u2019s resilience so far, it appears that the Fed has \u201cplenty of reason to keep monetary policy tight in the months to come,\u201d the First Trust economists said.<\/p>\n<p>Crossmark\u2019s Doll said that expectations for S&amp;P 500 earnings growth next year appear too strong, while companies may see \u201cmargin pressure\u201d in the third quarter. Companies could have more trouble passing through price increases to the consumer, while their own costs, including labor and raw materials, risk going up more than their revenue, he said.<\/p>\n<p>Meanwhile, the S&amp;P 500 will probably remain in a trading range this year of 4,200 to 4,600 until investors have \u201ca better idea\u201d of where the U.S. economy is going, said Doll.<\/p>\n<p>The U.S. stock market closed mixed Wednesday, with the S&amp;P 500<br \/>\n        SPX<br \/>\n       edging up 0.1% to close at about 4,467, according to FactSet data. The Dow Jones Industrial Average<br \/>\n        DJIA<br \/>\n       fell 0.2%, while the technology-heavy Nasdaq Composite<br \/>\n        COMP<br \/>\n       rose 0.3%.<\/p>\n<p>Wednesday\u2019s close left the Dow down 0.4% so far in September, while the S&amp;P 500 was off 0.9% and the Nasdaq had 1.6% losses month to date, FactSet data show.<\/p>\n<p><strong>Read:<\/strong> When will consumers stop buying more stuff? It\u2019s a key question for the stock market.<\/p>\n<p>In the bond market, Treasurys rates fell in the wake of Wednesday\u2019s inflation report, with the yield on the 10-year Treasury note<br \/>\n        BX:TMUBMUSD10Y<br \/>\n       declining 1.5 basis points to 4.248% while the two-yields<br \/>\n        BX:TMUBMUSD02Y<br \/>\n       slipped 1.9 basis points to 4.984%, according to Dow Jones Market Data.<\/p>\n<p>The bond market\u2019s reaction to the CPI report was \u201cbenign,\u201d said John Madziyire, senior portfolio manager and head of U.S. Treasuries and TIPS within Vanguard Group\u2019s fixed-income group, in a phone interview Wednesday. <\/p>\n<p>With inflation declining from last year\u2019s peak, the labor market \u201ccoming into balance\u201d and growth \u201cdoing well,\u201d there\u2019s no need for the Fed to be \u201crocking the boat too much\u201d with more interest rate increases this month or perhaps even for the rest of this year, in his view.<\/p>\n<p>Meanwhile, the consumer appears \u201cvery resilient,\u201d said Madziyire. As for Thursday\u2019s report on retail sales in the U.S. during August, he said that \u201cpretty much everyone agrees there is going to be a pullback,\u201d after data for July was helped by strong purchases on Amazon Prime Day.<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/for-stocks-this-was-the-worst-part-of-inflation-report-says-first-trust-9db6ac4f?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Major U.S. stock benchmarks remained down for the month on Wednesday, after a choppy trading session ended with mixed results as investors weighed the latest inflation report. \u201cThe Federal Reserve may have gained some traction against inflation, but the inflation problem is far from finished,\u201d said First Trust economists in a note Wednesday. \u201cThe worst [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":53078,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-60685","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>For stocks this was \u2018the worst part\u2019 of inflation report, says First Trust | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Major U.S. stock benchmarks remained down for the month on Wednesday, after a choppy trading session ended with mixed results as investors weighed the\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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