Stocks Down As Inflation Heats Up

Plus 5 New Strong Buys for Today Stocks Down As Inflation Heats Up [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Down As Inflation Heats Up [Stocks Down As Inflation Heats Up]Image: Bigstock Stocks plunged on Friday, and closed lower for the week, yet again. The Consumer Price Index report that everyone was waiting for on Friday, came in higher than expected at 8.6% y/y vs. the consensus for 8.2%, which tanked stocks. This was a disappointment given the narrative by some that inflation might have already peaked. With the April report coming in at 8.3%, which was a bit under March's 8.5%, there was hope that the downtick would continue for another month. But it was not to be, as energy and food prices continued to soar. For what it's worth, ex-Food and Energy, the CPI came in at 6.0% y/y vs. last month's 6.2%. So the hoped for moderation was seen in that iteration. But that's of little consolation given we all have to eat, and oil is used in so many things beyond just fueling our tanks and powering our homes. With inflation now at a new 41-year high, recession fears instantly grew. And talk of the Fed slowing things down to 25 basis point hikes after July (the Fed is widely expected to raise rates by 50 basis points at their June meeting, and then again in July), suddenly shifted to suggestions they could raise by 50 or 75 basis points – and not even wait until the September FOMC meeting, but do it in August, in between meetings, or maybe even in June or July. The Fed will announce their next rate hike at the conclusion of their 2-day FOMC Meeting on Wednesday, June 15th, at 1:00 PM ET. The only saving grace on Friday was that, in spite of the drubbing that stocks took, the indexes remained above their lows from 3 weeks prior. While that still supports the idea that stocks may have already bottomed, the difference isn't that much. And from the all-time highs to Friday's close, the Dow is down by -14.7% (correction territory), the S&P is down by -18.7% (correction territory), and the Nasdaq is down by -29.4% (bear market territory). So all eyes will be on the Fed this week. In the meantime, we'll see if the market can stay above their previous lows, or if they'll give way. Let me also say, in spite of the relentless inflation, and the overall somber mood in the market, there are still plenty of positives in the economy right now that are getting virtually ignored, which includes the strength in household spending, fixed business investment, industrial production, and, of course, the labor market. And with the Fed expecting GDP to 'advance at a solid pace over the remainder of the year,' the market will eventually have to take notice. Short-term and medium-term price action and concerns can oftentimes run contrary to the bigger picture. Nonetheless, it's still important to keep your eye on what the bigger picture still looks like. Because one day, the market will get back to paying attention to it. See you tomorrow, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research [2022's Hottest Electric Vehicle Stocks]( This year could be the biggest one yet for the unstoppable electric vehicle megatrend — but if you’re looking to take advantage, the time to act is now. That's why Luke Lango has just released his picks for the 11 best EV stocks of 2022. Each one has been hand-selected for its potential to deliver life-changing profits as electric vehicles continue to disrupt the automotive industry. [Download the report here.]( Most Popular Articles from Zacks.com [3 Top-Rated Stocks to Invest in for Stellar Earnings Growth]( Each of these stocks carries a Zacks Rank #1 (Strong Buy) and has experienced positive estimate revisions. 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Today you can access their live picks without cost or obligation. [See Stocks Free »]( [Bull of the Day: Enterprise Products Partners LP (EPD)]( This company stands to benefit from climbing oil and energy prices. [Read More »]( [New Zacks Strong Buys for June 13th]( Here are 5 stocks added to the Zacks Rank #1 (Strong Buy) List today. [Read More »]( More Zacks Resources Mobile App Download our app for convenient on-the-go access to even more—daily and weekly newsletters published by Zacks experts, proprietary research and tools, and Portfolio Tracker on Zacks.com. [Download our Zacks App for Apple iOS]( [Download our Zacks App for Android]( Zacks Members' Success Stories Visit [Success Stories]( to hear how Zacks research, tools and portfolios help our members outperform the market. Get all of our market insights and much more when you connect with us. 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