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Market Recap:Inflation Data Sends Mixed Signals, But Stocks Push Higher |
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Last week brought some conflicting inflation numbers. The Consumer Price Index (CPI), which tracks prices paid by everyday consumers, showed only a modest increase– reassuring news that inflation at the retail level remains under control. But the Producer Price Index (PPI), which measures costs for businesses and producers, jumped much more than expected. This raised some eyebrows because higher producer costs can eventually make their way to consumers. Even so, the stock market mostly looked past the hotter PPI report as investors seemingly remain fueled by the fact the Federal Reserve still expects to cut interest rates this year, tariffs have been less than feared, and corporate earnings have largely been solid, which provides a cushion for markets. The S&P 500 dipped slightly to start the week but quickly rebounded after the CPI report came in steady and Fed officials reinforced their independence. Stocks climbed to record highs midweek, only to wobble again after the PPI surprise. Still, by week’s end, positive economic data like relatively strong retail sales and solid manufacturing activity helped keep the overall momentum intact. For the week, the S&P 500 gained nearly 1%. Commodities were mostly weaker last week as gold slipped from record highs after the hotter than anticipated PPI report, and oil fell to multi-month lows, seemingly due to easing geopolitical tensions. Copper remained stuck in a sideways trend after its big July drop. The U.S. dollar edged down as, apparently, investors are increasingly expecting a Fed rate cut in September. Treasury yields stayed steady overall despite bouncing around on the conflicting inflation data, with the 10-year yield finishing near 4.3%. Bottom line: While inflation remains a bit of a puzzle and commodities have cooled, steady economic growth, strong earnings, and expectations of Fed support seem to be keeping the broader market backdrop constructive. While caution is sensible, the overall trend currently remains positive. |
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Source: Stockcharts.com On Deck this week: Jackson Hole The spotlight this week is on the Fed, with Chair Powell’s speech at Jackson Hole on Friday carrying big weight but little certainty. He could hint at a September rate cut or push back against those expectations, and investors will analyze his every word. Wednesday’s Fed meeting minutes will also be scoured over to see how much support there really is for cutting rates, and Thursday’s flash PMI will offer an early read on whether growth is holding steady or slipping further. Put simply, signs of steady growth and progress toward a September rate cut could keep stocks climbing, while weak data or pushbacks from the Fed may spark some market pressure. |
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The Takeaway: Riding High, Eyes Wide Open This summer’s market story has been one of resilience and record-setting highs. Currently, consumer spending is holding up, corporate earnings have been relatively impressive, and the possibility of Fed rate cuts later this year has kept optimism on the front burner. All reasons to smile, just not to snooze. Digging a little deeper, hints of caution are surfacing. Inflation looks mostly tame but hasn’t completely lost its bite thanks to tariff-driven price pressures. Hiring is easing back, household spending may be cooling, and consumer confidence is leveling off. Add in rising producer prices and a Fed that’s striking a careful, deliberate tone, and the picture gets more nuanced. None of this erases the strength we’re seeing now — but it marks the point where optimism should walk arm‑in‑arm with vigilance. Markets have a way of surprising us most when confidence feels unshakable. Bottom Line: It’s a good time to be encouraged and optimistic, but an even better time to stay curious, disciplined, and prepared. Please feel free to share these commentaries and, should you have any questions regarding your current strategy or the markets in general, please reach out to your CIAS Investment Adviser Representative. |
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