Stocks Down For The Week; Growth, Inflation And Stimulus In Focus

Plus 5 New Strong Buys for Today Stocks Down For The Week; Growth, Inflation And Stimulus In Focus [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Down For The Week; Growth, Inflation And Stimulus In Focus [Stocks Down For The Week; Growth, Inflation And Stimulus In Focus]Image: Bigstock Stocks were down on Friday and down for the week. The markets started off in positive territory on Friday, but were quickly put on the defensive after the Producer Price Index (PPI) for August rose 8.3% y/y. Quite frankly, that was not a surprise as it came in exactly as expected. But it was the biggest increase since 2010. And that just added to an already difficult week. For what it's worth, ex-food, energy & trade services, it was 'only' up 6.3%. Nonetheless, that's still pretty hot. It should also be pointed out that the Fed still expects these higher inflation readings to be transitory. Aside from appearing exaggerated due to base effects (comparing things to last year's pandemic-subdued numbers), the higher inflation readings are also being attributed to supply disruptions and worker shortages. Those should start seeing some relief as the enhanced unemployment benefits came to an end last week, which means millions of workers, which were incentivized to stay home rather than rejoin the workforce, will be forced to look for work. And with more jobs available than there are unemployed people to fill them, their reentry into the workforce will be greatly welcomed. And that will begin to ease supply constraints and labor shortages, thus adding to economic growth while simultaneously helping to ease inflation. The delta variant has also raised concerns after recent reports suggest the increase in cases contributed to slower economic growth during the summer. One should not confuse slower growth with no growth however. Q3 is still expected to come in at a robust 3.7%, but that is down from previous estimates of 5% and 6%. But full-year GDP is still expected to be one for the record books. And as hiring picks up, growth should rise along with it. Traders will also be listening for any news on the $1.2 trillion infrastructure bill, and the additional budget framework bill of $3.5 trillion. The Senate already passed both. The House is expected to bring each of those up for a vote in the coming weeks. And since the House has already agreed to take up the infrastructure bill by September 27th, after the budget bill is voted on, that leaves exactly 14 days for both of those to be put up for a vote. The infusion of more stimulus, especially the infrastructure bill, should further ignite the economy. But traders will also be anxious to see what tax increases are proposed to pay for it all. Taxes, of course, will counter some of the stimulative benefits. Either way, we've got a busy couple of weeks ahead. And in spite of last week's lower close, stocks continue to trade near record highs. And it won't take much to see them break out even higher. So make sure you're taking full advantage of it. See you tomorrow, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research Sponsor [Today, See Zacks' Top Stocks for Free]( Starting now, you can get instant access to the latest picks from our hottest market-beating strategies. From 2016 through 2020 they gained +381.1%, +424.1%, +429.0%, +477.8% and even +580.0%. Zacks will also give you a free Special Report, Top 10 Stock Screening Strategies with formulas you can use to find high-potential gainers anytime you please. 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