S&P 500 Losing Streak Hits 6 Days Following Wholesale Inflation Report, Consumer Price Index Data on Deck
The relentless march downward continues this week for the S&P 500, with yet another inflation data point giving investors cause for worry.
This time, wholesale prices rose 0.4% month over month in September, double the rate expected by most analysts.
The unexpected rise comes after wholesale prices fell in both July and August due to falling fuel prices. With fuel prices having shot up drastically in the second half of September, it appears that that is the likely culprit behind the price increases.
Predictably, investors took this data poorly; the S&P 500 closed down on the news day. Like other signs of increasing inflation, the primary worry is that the increase in wholesale prices will be one reason the Federal Reserve raises interest rates at its next meeting.
Investors will have another chance to digest inflation-related news when the monthly Consumer Price Index (CPI) report is released on Thursday. Should the CPI numbers come in higher than expected, the Federal Reserve will likely raise interest rates again. This will once again ratchet up the fears that a recession is incoming.
For its part, Federal Reserve officials are not giving investors much hope that “monetary policy tightening” (Fed-speak for raising interest rates) will stop soon. Minneapolis Fed President Neel Kashkari stated today that the bar to stop raising rates would be “very high,” meaning inflation must drop drastically from current levels.
Meanwhile, the release of the minutes from a recent Federal Reserve meeting suggests that Fed members believe that high-interest rates will be around for a while as inflation is “showing little sign so far of abating.” Those same minutes showed that members of the Federal Open Market Committee lowered their GDP growth projection to 0.2% and 1.2% for 2022 and 2023, respectively.
The S&P 500 (SPX) is currently trading at 3,664.46, up +2.44% on the day. YTD, the S&P 500 is down 23.6% YTD.
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