The Dow and S&P 500 hit new record highs after the latest consumer inflation data added support for the Fed’s contention that the price pressures are ’transitory’.
For the first time in five months, America’s Consumer Price Index came in on forecast, not above as it had for the four previous months as some of the drivers of the surge lost momentum (used car prices in particular).
The CPI for July rose as expected by 0.5% from June’s 0.9% rise for an unchanged annual rate of 5.4%. It’s the first time the annual rate has remained steady this year on a month to month basis.
Excluding food and energy, CPI rose by 0.3% compared to June, below market consensus of 0.4% and June’s rise of 0.9%.
The drop in the month-to-month inflation rate was the largest in 15 months.
That left the annual core rate up 4.3% after 4.5% in June.
Price rises for used cars and trucks, which have accounted for much of the rise in the CPI this year of rose 0.2%, a sharp drop from the 10.5% increase June. Prices for airline fares also edged down 0.1% instead of rising.
The CPI report confirmed, for the time being that the Fed’s inflation is ‘transitory’ story remains live, so the Dow ended up 0.6% or 220 points at a new high and the S&P 500 closed up nearly 11 points (0.25%) also at a new record close. The Nasdaq slipped 23 point or 0.16%.
And the overnight traders on the SPI added 6 to 7 points ahead of the resumption of ASX trading Thursday morning.
Gold perked up, as did oil and copper. Iron ore rose – the price of 62% Fe fines added $US3.04 a tonne to $US165.48 a tonne.
