VOO - VOO: PPI Increase And Surprise CPI Decline Raises Concern For Corporate Profits

2024-07-12 12:45:51 ET

Summary

• The weak CPI surprised market observers and caused concern about U.S. economic growth.
• Powell's comments about two-sided risks will continue to weigh on investors' minds.
• Rising PPI and declining CPI add the possibility of pressure on corporate profit margins.
• I expect cautious/negative trading in broad equity markets in the forthcoming weeks. It may be time for investors to consider booking some profits amid the uncertainties.

The surprising negative m/o/m CPI reading in the United States on Thursday, July 11 startled investors and economists. Investors, of course, were hoping to see another slowdown in consumer inflation in the hopes that it would finally lead the Federal Open Market Committee (FOMC) to commit to a foreseeable interest rate (Fed Funds Rate) cut. Those who were following FOMC chairman Jerome Powell's commentaries over recent weeks will know that Powell remained uncommitted to a near-term rate cut until more good inflation data came about ....

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