Markets rise as inflation shows signs of easing

Dow jumped 261 (nearing its record), advancers over decliners about 5-2 & NAZ advanced 161 (at a record).  The MLP index slid back 1+ to the 278s & the REIT index climbed 5+ to the 379s as yields declined.  Junk bond funds were in demand & Treasuries saw heavy buying which reduced yields (more below).  Oil was off pennies, just under 78, & gold gained 25 to 2385.

AMJ (Alerian MLP Index tracking fund)

Inflation eased slightly in Apr for the first time in months, a welcome sign for the Federal Reserve even as prices remained uncomfortably high for Ms of Americans.  The Labor Dept said that the consumer price index, a broad measure of how much everyday goods like gasoline, groceries & rent cost, rose 0.3% in Apr from the previous month.  The foecast expected to see a 0.4% monthly increase.  Prices climbed 3.4% from the same time last year, down from the 3.5% reading in Mar.  Another data point that measures underlying inflationary pressures within the economy also moderated last month.  Core prices, which exclude the more volatile measurements of gasoline & food in order to better assess price growth trends, increased 0.3% in Apr.  From the same time last year, the gauge climbed 3.6%, the lowest reading since 2021.  Altogether, the report indicates that while inflation has fallen considerably from a peak of 9.1%, it remains well above the Fed's 2% target.  High inflation has created severe financial pressures for most households, which are forced to pay more for everyday necessities like food & rent.  Price hikes are particularly devastating for lower-income Americans, because they tend to spend more of their already-stretched paycheck on necessities & therefore have less flexibility to save money.  Housing & gasoline costs were once again the biggest drivers of inflation last month, accounting for more than 70% of the total monthly increase.  Rent costs rose 0.4% for the month & are up 5.6% from the same time last year.  Rising rents are concerning because higher housing costs most directly & acutely affect household budgets.  Gasoline prices, meanwhile, jumped 2.8% over the course of Apr.  They are up 1.2% when compared with the same time last year.  Consumers received some reprieve on the cost of groceries, which fell 0.2% in Apr from the previous month.  However, grocery costs remain up 1.1% from the same time last year & up more than 21% when compared with Jan 2021, shortly before the inflation crisis began.

No end in sight for Americans as key inflation report released

A new survey of small business owners conducted by Capital One looked at how small businesses are dealing with adversity & remaining resilient amid uncertainty about the economic outlook. Capital One surveyed over 1000 small business owners with less than $20M in total annual revenue & at least 1 employee & found that the need for small businesses to be nimble to keep pace with the competition & not fall behind in the use of new, emerging technologies can take a toll on the owners who run them.  "Stress, anxiety and burnout are very real issues for small businesses," David Rabkin, exec VP & head of Business Cards & Payments at Capital One, said.  "Owning a business can take a toll on small business owners, employees, and the business itself, with economic hardships and uncertainty being the most commonly mentioned stressors."  "Many respondents cited needing to meaningfully pivot business practices to stay afloat. Examples include changing products or services offered, adapting their business models, changing (or adding) technology platforms, and redefining their target markets," he explained.  "Frequent changes driven by the broader economic environment are at the core of why 52% of small business owners expressed feeling stressed in the past year and 35% reported feeling mental exhaustion."  The survey also found that when small businesses are confronted with potentially pivoting their business to get ahead or keep pace, turning to their customers for feedback is a popular course of action with 49% saying they have discussed with customers whether & how to pivot their business.  "We're seeing small businesses listen to their customers' feedback and use it as a key impetus to make meaningful changes. When owners need to pivot in response to challenges they are facing in their industry, they often start with their customers," Rabkin explained.  "Our survey found that over half (53%) of small business owners said that listening to their customers allowed them to make changes effectively."  Even in the midst of economic uncertainty & an ever-evolving competitive landscape, over 90% of America's small business owners said they are optimistic about solving the problems facing their business & the broader future of their businesses.  "Respondents truly embodied the spirit of never giving up and showing resilience to succeed in their respective businesses," Rabkin noted.

New survey sheds light on how small business owners are staying resilient amid uncertainty

Treasury yields retreated after monthly consumer inflation data came in softer than anticipated.  The yield on the 10-year Treasury fell 7 basis points to 4.375% & the 2-year Treasury  yield was last at 4.755% after sliding by more than 6 basis points.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  The consumer price index rose 0.3% from Mar to Apr, slightly below the 0.4% forecast.  The measure of a basket of goods & services on an annualized basis increased by 3.4%, in line with expectations.  The data comes a day after the producer price index (PPI) for Apr, which tracks wholesale prices, came in higher than expected yesterday.  It rose 0.5% from the previous month, higher than the 0.3% increase expected.  Following the PPI release, Federal Reserve Chair Jerome Powell suggested the central bank would need to be patient as inflation has remained at a higher level than anticipated for longer.

Treasury yields drop after cool monthly consumer inflation data

With today's rally, Dow is flirting with its record highs after NAZ reached a new record yesterday.  Meanwhile safe haven gold is near its record made last month & Treasuries are in being purchased.  Risky investments (stocks) & safe haven securities are not supposed to be in demand at the same time!

Dow Jones Industrials