Wall Street had little love for the January Consumer Price Index (CPI) report today, with investors quick to sell stocks in early trading after consumer inflation came in hotter than expected.
As a reminder, the CPI measures the average change in the prices paid by consumers for a broad basket of market goods. I’ll discuss the CPI report, as well as the Producer Price Index (PPI) reading and January retail sales results, in more detail in Friday’s Market 360 article, but I’d still like to take a quick look at the CPI numbers today.
The CPI rose 6.4% in the past 12 months (the smallest 12-month increase since the period ending October 2021) and exceeded economists’ estimates of a 6.2% increase. For the month of January, the CPI climbed 0.5% – marking its highest rise in three months and also exceeding expectations of 0.4%. Core CPI, which excludes food and energy, rose 5.6% year-over-year and 0.4% in January.
A few more numbers worth noting…
- Food index increased 0.5% month-over-month and 10.1% year-over-year (four of the six major grocery store group indexes increased over the month)
- Shelter costs rose 0.7% month-over-month and 7.9% year-over-year
- Energy index increased 2% month-over-month and increased 8.7% year-over-year
All three categories played a significant role in the CPI increase, with higher shelter costs accounting for more than half of the rise. But not everything in the report was gloomy. In January, medical care services dipped 0.7%, used cars and trucks costs declined 1.9%, and airline fares fell 2.1%.
Overall, consumer inflation remains a little stubborn – especially in the shelter costs category – though the silver lining is that it’s still on the decline. But given investors’ reaction to the inflation report, it is clearly a driving force in the markets.
Now, putting the CPI aside, I also want to discuss my Portfolio Grader revisions. After taking a closer look at the latest institutional buying pressure and each company’s fundamental health over the weekend, I decided to revise my Portfolio Grader recommendations for 129 blue-chip stocks.
Chances are you have at least one of these stocks in your portfolio, so you may want to give this list a skim accordingly. I’ve listed the first 10 stocks below that were upgraded from a Hold (C-rating) to a Buy (B-rating). For the full list of 129 stocks – as well as their Fundamental and Quantitative Grades – click here.
|Ticker||Company Name||Total Grade|
|AEG||Aegon N.V. ADR||B|
|AEP||American Electric Power Company, Inc.||B|
|AIG||American International Group, Inc.||B|
|AON||Aon Plc Class A||B|
|APO||Apollo Global Management Inc.||B|
|ARES||Ares Management Corporation||B|
|AWK||American Water Works Company, Inc.||B|
We’re more than halfway through earnings season now, and based on the recent upgrades and downgrades, one trend remains clear: Companies that provide positive earnings, sales and future guidance are rewarded, while companies that reveal disappointing results and/or weak forward-looking guidance are shot.
And if you want to be successful in the current market environment – which is growing more narrow and fundamentally focused – it’s important to invest in companies that are able to maintain robust earnings and sales growth, as well as benefit from positive analyst estimates. These are the stocks that are well-positioned to prosper – no matter which way the market turns next.
Fortunately, at Growth Investor, we’ve taken steps to align our Buy List to prosper in the current environment, as we’ve loaded up on companies with accelerating earnings and sales momentum.
Click here to become a member of Growth Investor and receive immediate access to my stock picks, Top Stocks lists, latest Monthly Issues and more!
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