U.S. stocks logged their biggest one-day climb in two years on Thursday, following a better-than-expected Consumer Price Index (CPI) report. The report showed that inflation data cooled a bit in October, the first downside surprise in inflation in several months. [i] And the equity market received the news in a grand way, rewarding investors who have stuck it out during some rough patches throughout the trading year. Although this is only one trading day, it was a critical day to partake in. As we noted last week, some of the largest swings in the positive and negative direction take place during a bear market.
The inflation data brought forth positive news to the market and started raising thoughts around the Federal Reserve possibly easing the pace of its monetary tightening campaign. Jerome Powell made remarks earlier this month that the Fed was planning to stay the course unless they saw stability in terms of inflation and other data. So it’s possible that October’s inflation data may provoke a smaller rate increase compared to the staggering 75 basis point hikes we’ve been seeing. Time will tell and more data will be released before the last Federal Open Market Committee (FOMC) meeting of the year in mid-December.
Finally Seeing Relief on Your Grocery Bill
The long and, at times, painful food price increases finally showed signs of cooling in October. Food at home prices (grocery store or supermarket purchases) saw a smaller increase in October in comparison to September, and the smallest monthly increase in the category since last December. What food prices have risen more than the overall rate of inflation? Eggs, butter, flour and prepared flour mixes, lettuce, and bread/milk products have led in terms of the highest increase in prices year-over-year. Regarding egg prices, in addition to an increase in operation costs, the avian flu outbreak, which started around six months ago, has cut the egg-laying industry’s production capacity by about 10%.[ii] Many factors have played into the high cost of foods this year and coupled with high energy prices, many Americans have been forced to change their eating habits to try and find ways to save money.
Remembering our Veterans
Veterans Day is observed today, Friday, Nov. 11th. This holiday dates back to 1919, when president Woodrow Wilson, referring to it then as Armistice Day, said it “will be filled with solemn pride in the heroism of those who died in the country’s service”.[iii] The initial intent was to pause business briefly beginning at 11 a.m. and spend the day with parades and public meetings. Fast forward to 2022 – Many businesses and services are closed including USPS, most banks, non-essential federal government offices, and most schools. The bond market is also closed, although the New York Stock Exchange and Nasdaq remain open. We spend today honoring our country’s greatest patriots: all the men and women who have served in the nation’s military.
Thank you for your service!