Wall Street posted gains after a positive second-quarter earnings report despite market slowdown concerns.
Between all that’s going on, the highest inflation increase since 1981. The war between Russia and Ukraine and the Euro’s alarming fall meant that Wall Street ended today with significant gains.
Earlier this week, the Bureau of Labor Statistics released the June consumer price index report.
The CPI report noted that the U.S. consumer index prices rose by 1.3% in June, the largest increase over the past 12 months. In the same month the prior year, the consumer index rose by 1.1%. As for the all-time index, the CPI report posted a 9.1% increase, the highest increase since 1981.
Energy prices rose by 7.5% compared to last month’s CPI report, and food prices jumped by 1%.
Experts fears were legit regarding gasoline prices with an 11.2% month-over-month increase. As for the all-time other items, less food, and energy, the index shows a 5.9% year-over-year increase.
This data shows that the federal reserves and its aggressive monetary policy have failed to shrink inflation. The fears of a recession grow day by day, while Americans’ trust in FED officials decreases.
The U.S. dollar index is still gaining momentum while gold slowly declining to $1700 per ounce. As for the oil market, Brent oil hit the $100 level while WTI remains below $100 with a recent 1.86% increase. Experts believe that with the continued success of the dollar index, gold might drop even more, but in the event of a recession, the roles will change. The dollar will fall, and gold will rise.
Wall Street posted gains despite economical fears
As for Wall Street, its three major indexes posted big gains today after strong earnings reports from several banks and companies. At the end of the afternoon trading hours, the S&P index rose by 1.85% to 3,860.64 basis points. The tech-heavy Nasdaq posted a similar jump of 1.80%, while the Dow Jones average industry index increased by 2.15%, leading this week gains.
Investors were a bit afraid of catastrophic second-quarter earnings, due to major events and elements that could affect the corporation’s earnings. Beating all expectations, the S&P companies posted positive gains and once again proves the economy is still healthy.
In the second quarter, retail sales posted the fastest increase in three months with a 1% increase, when experts forecasted a 0.8% increase in the best conditions.
The initial concern was that the last two interest rate hikes of 50bp and 75bp would have an impact on the S&P gains. But today’s reports erased all threats and worries about the market’s current conditions.
Even with a strong second-quarter earnings report, the FED’s officials will increase the central bank’s interest rate aggressively, maybe by 75bp in the next meeting.
In the wait for more quarterly reports, it is still early to predict the next market direction. Will it rebound, or will inflation win after all?