S&P 500, Nasdaq and Dow all hit record highs after encouraging inflation data

[brooklynite]

Source: CNN

All three major indexes surged to record highs Wednesday after new data showed that inflation cooled in April after ticking up recently.

The S&P 500, tech-heavy Nasdaq Composite and blue-chip Dow all closed at new record highs after the latest Consumer Price Index showed that prices were up 3.4% for the 12 months ended in April, easing from 3.5% the month before.

The broad-market S&P 500 gained more than 1.2% on Wednesday and cracked the 5,300-level for the first time, closing at 5,308.15. The Nasdaq was about 1.4% higher, setting a new record at 16,742.39. The Dow, meanwhile, was up 350 points or 0.9% and teetered near the key 40,000-level, closing at 39,908. All three major indexes are tracking toward a winning week.

Read more: https://www.cnn.com/2024/05/15/economy/consumer-price-index-inflation-april/index.html

[BWdem4life]

1. Ok, not to be a downer...

But I really have to wonder about this analysis.

Yes, the inflation data is "encouraging" in the sense that the annualized CPI for April was 4.7% (2.5 percentage points lower than the annualized 7.2% for January, February and March).

But, (1) that's still 2 percentage points higher than the historical average of 2.7%; (2) the annualized inflation rate from January-April is still 6.6%, essentially equal to the annualized rate from January-April of last year.

When are we going to get a real, sustained break? One slightly better-than-the-past-few-months month is not something the average consumer is going to notice.

Hurray for the stock market, though.

[Happy Hoosier]

2. If a 2.5% annualized increase is only slight better....

then a a 2% decrease to the historical average is only slightly better than where we are now.

For me, thew trends are more important that the actual numbers, so there is good new that the trend of increasing inflation recently has reversd. I'll feel a LOT better if that trend is sustained, even a little.

I'm not botherd by high interest rates, since I don;t carry consumer debt and don;t forsee having to. Lower interst rats will actually be bad for me, since my savings interest will go way down. But I recognize that businesses love lower rates, and lower rates would benefit most consumers.