The Week on Wall Street
An improving inflation outlook buoyed investors’ spirits last week, helping lift stocks to solid gains.
The Dow Jones Industrial Average advanced 2.92%, while the Standard & Poor’s 500 rose 3.26%. The Nasdaq Composite index added 3.08% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 2.39%.1,2,3
Lower Inflation Spurs Buying
Stock prices surged mid-week when the U.S. Bureau of Labor Statistics released a better-than-expected Consumer Price Index (CPI) number, with buying momentum building throughout the trading session.
Gains were significant across the board, with technology and small-cap companies leading the market higher. The mid-week rally sent the S&P 500 to its highest level since May and the Nasdaq to its highest level since April. Bond yields fell on expectations that the Fed’s pressure to hike rates further might ease. After pausing on Thursday, stocks again ripped higher on Friday, aided, in part, by a report indicating improving consumer sentiment.4
The Consumer Price Index in July was softer than expected, with prices unchanged from the previous month thanks to a 4.6% decline in energy prices and a 7.7% drop in gasoline.4
Despite the encouraging results, the CPI report still evidenced upward price pressure. The year-over-year inflation rate remained at 8.5%, while the core CPI (excluding food and energy) came in at 5.9%. Among the index components seeing substantial price increases were food (+10.9% from 12 months ago) and shelter (+5.7%). Producer prices fell 0.5% in July, suggesting that future consumer price increases may continue to moderate.5,6
John Dombroski Jr. may be reached at (480) 991-1055 or [email protected]
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T H E W E E K L Y R I D D L E
Trains travel from one town to another town all day, always on the same track, always going nonstop and at the same speed. The noon train took 80 minutes to complete the trip, but the 4 PM train took an hour and 20 minutes. Why?
LAST WEEK’S RIDDLE: Just two U.S. states have capital cities whose names include the full name of the state. What states are they?
ANSWER: Indiana (Indianapolis) and Oklahoma (Oklahoma City).Posted on