Dow fell 65, decliners over advancers a very big 4-1 & NAZ was off 3. The MLP index pulled back 2+ to the 276s & the REIT index sank 6+ to the 379s as interest rose. Junk bond funds edged lower & Treasuries were heavily sold after the inflation news, & that sent yields higher. Oil went up 1+ to the 81s & gold dropped 15 to 2165.
AMJ (Alerian MLP Index tracking fund)
Inflation at the wholesale level rose much more than expected in Feb, the latest sign that price pressures within the economy remain elevated & difficult to tame. The Labor Dept said that its producer price index, which measures inflation at the wholesale level before it reaches consumers, surged 0.6% in Feb from the previous month. On an annual basis, prices remain up 1.6%, the highest level since Sep 2023. Those figures are both higher than the 0.3% monthly gain & the 1.1% annual figure predicted. In another sign that points to the stickiness of high inflation, core prices, which exclude the more volatile measurements of food & energy, jumped 0.3% for the month. That is higher than the 0.2% estimate, although it is below the 0.5% reading recorded last month. The figure was up 2% on a 12-month basis, unchanged from Jan. High inflation has created severe financial pressures for most US households, which are forced to pay more for everyday necessities like food & rent. The data comes 2 days after the Labor Dept said the more closely watched consumer price index, which measures the prices paid directly by consumers, rose 0.4% in Feb from the previous month & 3.2% from the same time last year, faster than anticipated. Both releases are considered to be important measurements of inflation, with the PPI believed to be a leading indicator of inflationary pressures as costs work their way down to consumers. The different gauges point to inflation that is still running above the Federal Reserve's preferred 2% target.
Wholesale inflation unexpectedly accelerates to highest level since September
As Americans have continued to sound off over sticker shock on retail and grocery shelves, the Treasury Secretary admitted that her public predictions were wrong. "We have in recent months seen some inflation, and we – at least on a year-over-year basis – will continue, I believe through the rest of the year, to see higher inflation rates, maybe around 3 percent," Yellen said. "But I personally believe that this represents transitory factors." "I regret saying it was transitory [inflation]. It has come down, but I think transitory means a few weeks or months to most people. And it's lasted longer than that," Janet Yellen said. In early Jun 2021, Yellen had tamped down inflationary concerns, claiming rising costs & the contributing factors were "transitory," a term used to describe temporary market conditions. "We have in recent months seen some inflation, and we – at least on a year-over-year basis – will continue, I believe through the rest of the year, to see higher inflation rates, maybe around 3 percent," Yellen said that in Jun. "But I personally believe that this represents transitory factors." Just 1 year after her comments, inflation surged to 9.1%, which had not been seen in 4 decades. Fast-forward to this week, when Labor Dept data indicated inflation unexpectedly ticked higher in Feb thanks to a jump in the cost of gasoline & rent, climbing to 3.2% year-over-year. Yesterday Yellen recognized the financial pain was still being felt within the housing & rent markets.
Yellen comes clean about claiming inflation wouldn't last: 'I regret saying it'
Spending at US retailers rebounded in Feb, but consumers may be growing more cautious as they continue to face high interest rates & steeper prices for everyday goods. Retail sales, a measure of how much consumers spent on a number of everyday goods including cars, food & gasoline, climbed 0.6% in Feb, the Commerce Dept said. That is lower than both the 0.8% increase forecast & the revised 1.1% decline recorded in Jan. Excluding the more volatile measurements of gasoline & autos, sales rose just 0.3% last month. "Not a strong showing given a bigger rebound was expected from January," said Robert Frick, corp economist with Navy Federal Credit Union. "Consumers have the money, as inflation-adjusted incomes have been rising, so the question is, have consumers grown cautious? It’s too soon to say, but with inflation stuck for now above 3% and the jobs market growing tighter, that’s a possibility." The Feb advance is not adjusted for inflation, meaning that consumers may be spending the same but getting less bang for their buck. Spending rose mostly across the board, with notable increases in sales at electronics & appliance stores, restaurants & bars, motor vehicle & parts dealers & gas stations, as prices at the pump soared. But Americans pulled back their spending on furniture & home stores, health & personal care stores, clothing retailers & online shopping, with spending at non-store retailers sliding 0.8% from the previous month. Sales rose in 8 of 13 retail categories last month.
Retail sales rebounded in February, but consumers may be growing more cautious
The gloomy data on inflation & retail sales did not disturb traders too much. However inflation remains higher than many would to see & it looks like it will postpone rate cuts by the Fed for awhile. The popular stock averages did not see heavy selling even though many stocks were sold. The US economy is not as strong as the bulls would like to see.Dow Jones Industrials
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