Growth Stocks Are Being Helped by Inflation Expectations
It's time for some positivity in recent market news as, courtesy of the AAII, as their analysis below makes the argument that growth stocks are being helped by all the speculation over inflation. Hope everyone had a great weekend.
Inflation is high. The yield curve remains inverted. The Federal Open Market Committee (FOMC) is expected to raise rates by at least 50 basis points (bps) for a fourth consecutive time at its next meeting. Growth estimates for full-year S&P 500 index earnings are being reduced.
Yet, the stock market is in the midst of a very strong summer rally.
Mr. Market never tells you when it's time to get back in. Rather, he looks forward. Current sentiment and prevailing stock prices are weighed against what could be coming over the horizon. If gloom is currently being perceived and sunnier skies are expected to appear in the future, stocks often rally in anticipation of a change.
One such anticipated change is inflation. June's 9.1% increase in the consumer price index (CPI) is being perceived as a peak. July's 8.5% increase in the CPI, while still high, was a welcome step in the right direction.
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