Stock market today: hot June CPI cools stocks
IInvestors received the latest update on the inflation picture in the United States on Tuesday, and a wobbly day for stocks indicated they were having issues with it.
US consumer prices in June easily beat expectations, jumping 0.9% month-over-month and 5.4% year-over-year – two moves like this since 2008. A 0.9% mo-mo increase in the basic consumer price index was even more heady.
“Cutting out food and energy, this was the highest impression since November 1991 year-over-year,” said Cliff Hodge, chief investment officer at Cornerstone Wealth. “However, in the future, we expect these inflation numbers to start to cool. June 2020 was the all-time low for core CPI during the end of the pandemic, so comparisons become more difficult from here. “
But just how transient this inflation really is is still a subject of debate.
“Companies are now passing their higher input costs (for supplies, products, labor) on to their customers,” says Jennifer Lee, senior economist at BMO Capital Markets. Earlier this morning, the latest NFIB survey for June showed that 44% of companies were planning to increase their selling prices, the largest share since 1979. Producer prices for May were up more than 5% from 2019 levels, while import prices are 4% higher. “
“The transitional debate is far from over,” she adds. “It actually got a little warmer.”
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The main indices fluctuated between small gains and losses before ending up in the red. the Dow Jones Industrial Average ended Tuesday down 0.3% to 34,888, the S&P 500 ended 0.4% lower at 4,369, and the Nasdaq Composite closed with a decrease of 0.4% to 14,677.
Other stock market action today:
- Small cap Russel 2000 fell 1.8% to 2,240.
- Q2 earnings season has started off with a bang for soft drink specialist PepsiCo (PEP, + 2.3%). The company posted adjusted earnings per share (EPS) of $ 1.72 on revenue of $ 19.2 billion over the three-month period, far exceeding analyst consensus expectations. PEP also raised its adjusted EPS forecast for the full year, citing growing demand as many restaurants and venues reopen.
- Several large banks also reported profits today. Goldman Sachs (GS) reported EPS of $ 15.02 on revenue of $ 15.4 billion, well above expectations, as revenue from its investment banking unit soared in a booming initial public offering (IPO). JPMorgan Chase (JPM) also beat estimates in the second quarter, reporting earnings of $ 3.78 per share on $ 31.4 billion in revenue, in part thanks to the financial firm’s release of $ 3 billion in reserves for loan losses. The results did not impress investors, however, with GS slipping 1.0% and JPM ending the day down 1.4%.
- U.S. Crude Oil Futures rose 1.6% to close at $ 75.25 a barrel – their highest settlement since October 2018.
- Gold Futures edged up 0.2% to $ 1,809.90 an ounce.
- the CBOE Volatility Index (VIX) gained 6.3% to 17.18.
- Bitcoin fell 1.7% to $ 32,302.97. (Bitcoin trades 24 hours a day; the prices listed here are at 4 p.m. each trading day.
All eyes on health care
While some inflationary pressures, such as sky-high used car prices, appear doomed to recede, some price increases are expected to persist for years, such as in healthcare.
In 2019, the Centers for Medicare & Medicaid Services predicted that healthcare spending would grow 5.3% per year through 2028, which includes expectations of 2.4% annual growth in healthcare prices. – higher than the overall inflation rate of 2.2% over five years expected by the bond market, according to economic data from the Federal Reserve.
“While the pandemic has caused people to postpone care for much of 2020, a rebound and then continuing trends beyond 2021 would drive healthcare spending to historic levels in the years to come,” said the consultancy and consultancy firm Deloitte.
Investors have many options available to them to take advantage of this long-term spending trend. Income hunters often flock to the top-notch pharmaceutical stocks that waste a lot of money. Those with a nose for growth will naturally gravitate towards the often explosive biotech stocks, but remember: you can still reap the benefits of this cutting-edge industry while reducing risk through the use of these nine fund-traded funds. stock market (ETF).
Above all, a rising tide of health care spending is expected to lift many boats. And investors looking to put their money to work for both the rest of the year, as well as the rest of the decade, can find a place to start with this list of healthcare opportunities.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.