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Why the Red-Hot June CPI Report Could Be Good for Growth Stocks

  • Growth stocks may benefit from June’s Consumer Price Index (CPI) report.
  • Inflation surpassed Wall Street’s estimate for the month.
  • That could be a signal for traders to acquire growth stocks during peak inflation.
An image of a man relaxing, sleeping on a stock growth chart; growth stocks

Source: eamesBot / Shutterstock

Growth stocks, such as Airbnb (NASDAQ:ABNB), Advanced Micro Devices (NASDAQ:AMD) and Microsoft (NASDAQ:MSFT), could be about to benefit from the latest Consumer Price Index (CPI) report with inflation surpassing estimates.

To summarize that report, inflation increased 9.1% in June compared to the same time last year. That’s the most since November 1981 and is also a 1.3% increase compared to May. To top it off, inflation rose faster than the 8.8% that analysts were predicting for the month.

So why exactly will this benefit growth stocks? Wells Fargo senior equity analyst Christopher P. Harvey says higher-than-expected inflation could be a boon to growth stocks as investors see it as peak inflation.

He said the following in a note to clients obtained by Investing.com.

“We expect equities to have another near-term pop (risk-on rally) if headline CPI is in-line with, slightly above, or well below the consensus of 1.1% m/m (total) and 0.5% m/m (core). We believe analyst bias and an asymmetric payoff structure is building a consensus that will be difficult to exceed… After May’s CPI miss, and last Friday’s miss on payrolls, we now expect a near-term upward bias to forecasts.”

Considering the rough year growth stocks have had so far, a boost from the inflation news would be welcome. However, it’s also worth mentioning that this might only be a near-term increase as continued inflation could pull the shares back down.

Investors on the lookout for more recent stock market news will want to keep reading!

We’ve got all the hottest stock news that traders need to know about for Wednesday! That includes everything going on with shares of Romeo Power (NYSE:RMO), Stitch Fix (NASDAQ:SFIX), and Polestar Automotive (NASDAQ:PSNY) stock today. You can read up on these matters at the links below!

More Stock Market News for Wednesday

On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2022/07/why-the-red-hot-june-cpi-report-could-be-good-for-growth-stocks/.

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