The markets got another inflation reality check this morning when the Consumer Price Index came in at 0.9% month-over-month and 6.2% over-year, a 40-year high. The Producer Price Index came in yesterday at another all-time year-over-year high. Despite the reality check, we may find that the Fed maintains its own alternate reality by keeping fed funds at 0%. Not something we would consider rational based on historical precedent, but as is often the case in this market environment, thinking in rational terms doesn’t always get you very far.
This morning’s opening bell saw some initial selling in higher-PE tech and growth names as money pushed into inflation-trade situations, otherwise known as stuff stocks, seen as benefiting from inflationary trends. The NASDAQ Composite Index was the worst performing index, down -1.66% on volume that was above average while the S&P 500 closed down -0.82% on higher volume.