The stock market is in the green this morning despite a hotter-than-expected inflation report; why are stocks up today?
Well, it appears Wall Street is weighing earnings over the economy today. Indeed, most major indices are climbing this morning as investors consider promising earnings figures from the likes of Bank of America (NYSE:BAC) and Oracle (NYSE:ORCL), both of whom beat earnings estimates
The S&P 500 is up 0.77% at the time of writing, while the tech-centric Nasdaq Composite is eyeing an early 1.1% uptick. Both indices are trending at around their all-time highs, enjoying the fruits of last year’s bull run as well as this year’s strength so far. The S&P is up about 9% year-to-date, while the Nasdaq is up 10%.
Why Are Stocks Up Today?
Stocks are up despite a relatively disappointing inflation reading via the Consumer Price Index (CPI) report released this morning. Prices climbed 0.4% in February, putting inflation at 3.2% year-over-year. This is higher than January’s inflation reading of 3.1% and worse than projections of 3.1% annual price growth.
Today’s report confirms that inflation is proving more resistant than many economists previously assumed. Indeed, today’s report comes as something of a follow-up to the January CPI, which also showed hotter-than-anticipated inflation.
This is bad news for Wall Street as stubborn inflation paired with a relatively solid labor market gives the Federal Reserve plenty of leeway to hold off cutting rates until later in the year. As Jeffrey Roach, chief economist for LPL Financial, notes:
“The inflation experience is a bit like the concentration in the equity markets right now. Outside of shelter and gas prices, inflation would be benign. The long term disinflation trajectory has probably not changed but the path to the Fed’s 2% target will be choppy.”
On the date of publication, Shrey Dua did not hold (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.
