The Labor Department on Thursday 11/10/2022 released the consumer-price index (CPI) for October and it’s up 7.7% from a year ago. This compares to 8.2% for September and signals inflation may have peaked and is now trending down. CPI includes goods and services consumer consume. The core CPI excludes energy and food which are volatile is up 6.3% and is also trending down from the prior month’s 6.6%. As inflation improves, the Federal Reserve can consider trimming the interest rate increases. Consumer spending had been too strong fueled by ultra low interest rates and government stimulus checks for COVID and the Federal Reserve has been trying to reduce demand by increasing interest rates.
Stocks are up from the CPI data. All market indices are up significantly. The Nasdaq is 10,991.18 +638.00 (+6.16%) and the Dow is up 33,518.92 +1,004.98 (+3.09%) and S&P 500 also up 3,926.48 +177.91 (+4.75%). This is the reason you don’t want to out of the market. These types of rallies are not easy to predict and if you missed it, you will miss out of the gains.
The effect of higher interest rates is having the desired effect on housing. Mortgage rates has taken off and housing sales have fallen and more importantly, housing prices will come down with lower demand.