Blog Post

Stocks End a Volatile Week Mixed As Inflation Remains High

Many market analysts were scratching their heads as stocks staged a strong rally on Thursday following higher than expected September inflation.  Stocks fell on Friday following weaker than expected retail sales.  For the week, the Dow Jones Industrial Average posted a modest gain but all other major stock indices declined with emerging markets posting the biggest decline.

The Federal Reserve released their minutes from their September meeting which showed concern that inflation will remain high and will require more rate hikes to tame.

Corporations began reporting 3rd quarter earnings this week with overall modest earnings growth.

Treasury bond yields rose with the 30-year bond at 3.992% and the 10-Year note at 4.025%.  30 year mortgage rates rose to 7.21%.  Crude oil declined to $85.74 a barrel and natural gas fell to $6.472 per MMBTUs.  The U.S. dollar index rose to 113.24 and gold fell to $1648.90 an ounce.

  • China reported:
    • Annual consumer inflation hit 2.8% in September, up from 2.5% year over year in August.
    • Annual producer price increases slowed to 0.9% in September.
  • The Labor Department reported:
    • The producer-price index rose 0.4% in September following a revised 0.2 increase in August.
      • Core PPI,  excluding volatile food and energy also rose 0.4% in September up from 0.2% in August.
      • From a year earlier, producer prices rose 8.5% in September down from 8.7% in August.
    • Consumer prices rose 0.4% in September and are up 8.2% from a year ago, down from 8.3% in August.
      • Core consumer prices, excluding volatile food and energy rose 0.6% and are up 6.6% from a year ago, the highest in 40 years.
      • The biggest increases were in shelter, food and medical services.  Energy fell 2.1% in September.  Prices for used cars, apparel and communications also fell.
    • Retail sales were flat in September.  Retail sales are not adjusted for inflation.  If they were adjusted, they would be negative.
      • Excluding gasoline and autos, retail sales rose 0.3%.
      • Gasoline sales fell 1.4% but were up 21% from a year ago.
      • Spending at electronics and appliance stores fell 0.8%.
      • Spending at furniture stores fell 0.7%.
      • August retail sales were revised up to a 0.4% gain.
    • Seasonally adjusted first time claims for unemployment were 228,000, up from a revised 219,000 in the prior week.
      • The 4-week moving average of claims, designed to smooth out volatility, 211,500 up from a revised 206,500.
      • For the full unemployment report go here: .
  • The EIA weekly oil report is here: .  Also, the EIA reported in the prior week:
    • Field production of crude oil fell from 12.0MM BPD to 11.9MM BPD.
    • Natural gas storage rose 125BN cubic feet and is below the 5-year average at this time of year.
  • Baker Hughes reported the number of active oil rigs rose 8 to 610.  The number of active natural gas rigs fell 1 to 157.
  • Factset reported that with 7% of S&P 500 companies reporting Q3 earnings, the blended earnings growth rate was 1.6%.

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Thank you,

Loren C. Rex, CFP®, MA                                                                     Erik A Smith, AIF®

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These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.


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