Inflation remained in the center today with the morning release of the Producer Price Index (PPI) for August. Similar to yesterday’s consumer price index (CPI), the PPI – which measures what suppliers charge for goods and services – rose at a slower annual pace in August than in July. However, on a monthly basis, both the PPI and the core PPI, which excludes energy and food prices, have increased from July data.
“There is a divergence in the rise of stocks and base inflation, where the stock is cooling and the core is warming,” says Jamie Cox, managing partner of Harris Financial Group. “This is a strange phenomenon and probably influenced by the shift from goods to services post-pandemic. The Fed should proceed with caution and not hit the emergency brake on rate hikes.”
While yesterday’s sales were wide-ranging, today’s action was more mixed. In terms of sector performance, real estate (-1.2%) e materials (-1.2%) were the laggards, while power (+ 2.8%) outperformed as US crude oil futures it rose 1.3% to settle at 88.48 dollars a barrel.
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As for the main indices, the Nasdaq composite closed with 0.7% at 11,719, while the S&P 500 Index (+ 0.3% to 3,946) and the Industrial average of the Dow Jones (+ 0.1% at 31,135) closed even with modest gains.
Other news on the stock market today:
- The capital letter Russel 2000 increased 0.4% to 1,838.
- Futures on gold it was down 0.5% to close at $ 1,709.10 an ounce.
- Bitcoin it lost 1.7% to $ 19,968.03. (Bitcoin is traded 24 hours a day; prices listed here are starting at 4pm)
- Starbucks (SBUX) jumped 5.5% after the coffee chain raised its long-term growth targets. The company now expects annual earnings per share growth of 15% to 20% over the next three years, and same-store sales growth of 7% to 9%, up from the previous growth forecast of respectively. 11% and 4.5%. , in the middle. SBUX also said it plans to build approximately 2,000 new stores in the United States by 2025, bringing its worldwide total to 45,000 locations, and will begin repurchasing its shares in the next fiscal year. “Starbucks has set a high bar for itself, and while we believe it is achievable given the strength of the brand and new management skills, we believe that skepticism about the challenges of accelerating growth persists, particularly at a time of macro uncertainty. “says BofA Securities analyst Sara Senatore (Buy).
- Railway stocks such as Pacific Union (UNP, -3.7%) e Southern Norfolk (NCI, -2.2%) fell today as negotiations between freight rail unions near a deadline that could lead to a potential strike if all parties do not reach an agreement by the end of the week. Benjamin Nolan, an analyst at Stifel Research, summarizes: “In short, the 12 rail syndicates and the United States Class 1 and a handful of smaller carriers have been at the negotiating table in recent years. Both sides have not been in. able to reach agreements. Then, the White House got involved and made non-binding recommendations that so far nine unions have agreed. We are now in the last week of negotiations before the collective bargaining process of the railway labor law takes its course and on Friday the parties are free to strike / block the work “. While Nolan thinks a rail strike is “unlikely”, he expects a “last minute deal or immediate Congressional intervention”.
Overcome the market storms with the Dividend Kings
This week’s inflation updates only ensure another aggressive rate hike by the Federal Reserve at next week’s policy meeting. According to CME Group, the probability of the central bank raising the benchmark rate by 75 basis points has jumped to 74% from 45% a month ago, while the odds of a 100 basis point rate hike are now 26% from zero in that same amount of time. A basis point is one hundredth of a percentage point.
And the Fed is likely to “hold its hawkish stance until it sees a sustained downward trend in inflation,” said Eric Sterner, chief investment officer for financial planning firm Apollon Wealth Management. Sterner believes that risky assets will continue to struggle, which means that “investors should maintain a defensive and diversified portfolio to weather this storm.”
We often recommend dividend stocks as an area where investors can seek shelter. And what better place to find the cream of the crop of income-growing names than with the Dividend Kings, elite members of the Dividend Aristocrats who have a minimum of 50 consecutive years of dividend increases behind them. This makes these consistent dividend producers a little more reliable than your typical income investment, especially in a year full of market ups and downs.