Stubborn Inflation and High CPI to Drive Stock Markets Down
The Consumer Price Index (CPI) climbed by 3.0% in January, as compared to the same time last year, with Core CPI up 3.3%- higher than analysts expected.
A high CPI report has caused the stock market to dip, as the numbers indicate that inflation is sticky and unlikely to decrease anytime soon. The U.S. CPI numbers were up 3.0% from last year, with core CPI, which ignores energy and food prices, was up 3.3%. That is higher than the expected 3.1%, and the high numbers show that inflation is very resilient right now.
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The biggest increase was for shelter, which accounted for 30% of all increases in CPI for the month. Shelter costs rose by 0.4%, with energy costs rising by 1.1%. The reports showed that food was up too, with food prepared at home increasing 0.5% and restaurant food increasing by 0.2%. The combined numbers forced total food costs up by 0.4% in January.
How the Stock Market Reacted
The Dow Jones fell as a result of the report, by 225 points or 0.50%. The S&P 500 likewise dropped, losing 0.27% by the time trading ended on Wednesday. The Nasdaq Composite is the only one of the three top stock indices that was up, with a meagre 0.03%.
A few tech stocks gained on Wednesday, like Tesla (TSLA), up 2.44%, and Apple (AAPL), up 1.83%. They are not as likely to be affected by the rising cost of food, energy, shelter, and other essential goods that factor into the CPI.
The Dollar Tree (DLTR) fell 0.69%, and Target (TGT) suffered a loss of 2.92%. Tyson Foods was a loss hit by the market news, with a decrease of 1.69% on Wednesday.
We may continue to see the impact on stocks related to food clothing, housing, and energy throughout this week, but it may take a little longer to see tech stocks impacted by the news. As inflation remains high, consumers will be less likely to spend their money on nonessentials, which could cut into the revenue of some of the companies whose stocks are performing well right now.
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