{"id":1142,"date":"2024-02-16T12:09:57","date_gmt":"2024-02-16T12:09:57","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/02\/16\/dont-freak-out-about-the-stock-markets-inflation-freakout\/"},"modified":"2024-02-16T12:09:57","modified_gmt":"2024-02-16T12:09:57","slug":"dont-freak-out-about-the-stock-markets-inflation-freakout","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/02\/16\/dont-freak-out-about-the-stock-markets-inflation-freakout\/","title":{"rendered":"Don\u2019t freak out about the stock market\u2019s inflation freakout"},"content":{"rendered":"
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Stock markets threw a tantrum Tuesday, posting big losses after slightly hotter-than-expected inflation data stoked worries that interest rate cuts may not be coming soon.<\/p>\n

But don\u2019t freak out. Markets tend to overreact. January\u2019s consumer price index report is just one number in an overall trend that has been moving steadily in the right direction. Inflation has cooled from a 6.4% annual growth rate <\/strong>in December 2022 to less than half that a year later.\u00a0<\/p>\n

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\u201cIt\u2019s important not to overreact and jump to the assumption that an inflationary resurgence is developing,\u201d Seema Shah, chief global strategist at Principal Asset Management, wrote in a note to clients.<\/p>\n

She added that January\u2019s\u00a0number, while higher than expected, was driven in part\u00a0by segments that are less important for the Federal Reserve as it weighs inflation against potential rate cuts. \u201cForward looking indicators suggest they will ease over the coming months,\u201d Shah wrote.<\/p>\n

Goldman Sachs economists, meanwhile, said inflation in January was propped up by new-year price increases for medical services, car repair and insurance, and child care. \u201cWe assume inflation in these categories returns to the previous trend on net in February and March,\u201d they wrote.<\/p>\n

So why such big losses in the market?<\/p>\n

Investors have fully priced in a so-called \u201csoft landing\u201d \u2014 cooling down inflation and the hot economy without a recession. That assumption is a key driver behind a big rally in stocks over the past year. The S&P 500 recently topped 5,000 for the first time ever, the Dow Jones Industrial Average has hit record highs, and the tech-heavy Nasdaq Composite has rallied 30% in the past year.<\/p>\n

For investors, after months of stock market gains and soft-landing certitude, Tuesday\u2019s losses are a reminder about potential risks.\u00a0Still, markets could easily bounce back.<\/p>\n

January\u2019s inflation data may also be what economists call \u201cnoise,\u201d representing something outside the overall trend. A big part of the inflation surprise was a 0.6% jump in shelter costs from December. Most economists forecast shelter inflation \u2014 particularly rent \u2014 to ease substantially this spring.<\/p>\n

In the meantime, the economy is strong. The job market remains robust. Wages are rising faster than inflation.<\/p>\n

Because the Fed traditionally cuts rates in a slowing economy, though, they may sit out a while longer, perhaps until June instead of May. And the inflation watch continues.<\/p>\n

The \u201chotter-than-expected inflation reading emphasizes the persistent upside risks that continue to percolate in the U.S. economy,\u201d said Kayla Bruun, senior economist for Morning Consult. Wage growth is adding purchasing power to already robust consumer spending.<\/p>\n

It\u2019s \u201ca strong combination that, if persistent, could hinder sustained moderation of inflation,\u201d she said.<\/p>\n<\/p>\n

This post appeared first on NBC NEWS<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Stock markets threw a tantrum Tuesday, posting big losses after slightly hotter-than-expected inflation data stoked worries that interest rate cuts may not be coming soon. But don\u2019t freak out. Markets tend to overreact. January\u2019s consumer price index report is just one number in an overall trend that has been moving steadily in the right direction. […]<\/p>\n","protected":false},"author":0,"featured_media":1143,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1142","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/1142","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=1142"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/1142\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/1143"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=1142"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=1142"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=1142"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}