CPI Report Comes In With a Bang

NYSE: SPY | SPDR S&P 500 ETF Trust News, Ratings, and Charts

SPY – Last week, I discussed all of the reports we had coming due before the Fed’s December meeting (and rate hike announcement)…including the very important Consumer Price Index (CPI) report that was released this morning. It felt premature to send out my pre-Fed meeting market commentary before that last important inflation measure came out, and, boy… I’m glad I waited. Because it’s a doozy of a report. How this report impacted the S&P 500 (SPY) and what this could mean in the coming days is the focus of this week’s commentary. Read on below for more…

(Please enjoy this updated version of my weekly commentary published December 13th, 2022 from the POWR Growth newsletter).

So, before we dive into today’s market-moving CPI report, I want to give you a quick recap of all the other big economic reports we got last week.

Productivity and labor costs: Revised higher than expected while labor costs for the quarter were revised down; both good signs when you’re looking to curb inflation.

Consumer credit: Lots of borrowing in October. Consumer credit continued to climb; the year-over-year growth rate is 6.9%, which is faster than 4.7% wage growth for the month. Strong sign of consumer demand.

Unemployment claims: Hit a 10-month high, due in part to a number of big layoffs at major companies. The 1.7 million jobless claims was slightly higher than economists were expecting, evidence that the strong labor market is softening.

Producer Price Index (PPI): Rose by 7.4% in November (year over year); that’s lower than the October growth rate (8.1%), but higher than what economists were forecasting for the month (7.2%). Inflation is falling… just slower than people were expecting.

University of Michigan Index of Consumer Sentiment: Improved more than expected. Inflation concerns also fell to a 15-month low.

Which brings us back to today’s Consumer Price Index (CPI) report.

For November, prices rose 7.1% year over year… which is faster than they climbed in October. BUT! — and this is the important part — that’s a slightly slower pace than economists were expecting.

The forecast for November was a 7.3% increase in prices.

Cue the confetti! That’s two months in a row where inflation came in slightly less than economists were expecting!

The S&P 500 (SPY) opened 2% higher on the news, although gains have moderated in the few hours since. We’re currently up about 0.7% for the day.

So, what does all this mean for us?

Well, I think it’s almost guaranteed that we’ll get a 50-basis point hike from the Fed tomorrow afternoon. There have been more than a few data points that show the economy is getting weaker, which has been the purpose behind these big, consecutive rate hikes.

It certainly doesn’t mean we’re at the start of our next bull market. In fact, some of these data points make me more wary of a potential recession. But the inflation news has been so bad for so long, I’m not surprised people are excited to see a little progress.

Don’t worry; the Fed still has plenty of time to spoil the party. If Powell’s post-meeting comments are in any way bearish, it could spark a big negative market reaction.

In fact, I’m pretty sure this is exactly what’s going to happen, since Powell will probably need to remind us all that the softening CPI numbers are a step forward, but there’s still much more work to be done (and pain).

The Fed’s “dot plot” could also put a damper on the CPI party. When the Fed last released these projections in September, they showed forecasts that the fed funds rate would peak between 4.75% and 5.0% sometime in 2023 before slowly coming back down the following years.

If the newest dot plot shows more Fed officials casting their “dots” at this highest level, or some officials forecasting an even higher level in 2023, or dots forecasting a heightened level for longer, then we would likely see some selling.

Personally, I still think it’s a little silly that we’re partying at all over a very minor “dovish” shift (and is it REALLY dovish if it’s still a rate increase??) when it’s still just as likely that we’ll be facing interest rates of 5% or higher over the next few years. But that’s just me.

What To Do Next?

The POWR Growth portfolio was launched in April last year and since then has greatly outperformed just about every comparable index…including the S&P 500, Russell 2000 and Cathie Wood’s Ark Innovation ETF.

What is the secret to success?

The portfolio gets most of its fresh picks from the Top 10 Growth Stocks strategy which has stellar +49.10% annual returns. I then take the very best stocks from this strategy and tell you exactly what to buy & when to sell, so you can maximize your gains.

If you would like to see the current portfolio of growth stocks, and be alerted to our next timely trades, then consider starting a 30 day trial by clicking the link below.

About POWR Growth newsletter & 30 Day Trial

All the Best!

Meredith Margrave
Chief Growth Strategist, StockNews
Editor, POWR Growth Newsletter

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


SPY shares . Year-to-date, SPY has declined -14.39%, versus a % rise in the benchmark S&P 500 index during the same period.


About the Author: Meredith Margrave


Meredith Margrave has been a noted financial expert and market commentator for the past two decades. She is currently the Editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Meredith's background, along with links to her most recent articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SPYGet RatingGet RatingGet Rating
.INXGet RatingGet RatingGet Rating
DIAGet RatingGet RatingGet Rating
IWMGet RatingGet RatingGet Rating
QQQGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Investors: Are You Ready for November?

The S&P 500 (SPY) tumbled to end October. Is that a harbinger of more downside to come? Or will the bull market return with gusto? Investment pro Steve Reitmeister shares his time market views including a preview of his favorite stocks. Get the full story below...

3 Cybersecurity Stocks Defending Against Digital Threats

The demand for cybersecurity solutions is rising as digital threats and sophisticated cyberattacks continue to escalate. Therefore, it might be wise to keep track of cybersecurity stocks, CrowdStrike (CRWD), Palo Alto Networks (PANW), and Fortinet (FTNT), as they offer innovative solutions presenting further growth opportunities. Continue reading...

3 Oil Stocks With High Upside as Global Demand Rebounds

The outlook for oil demand growth appears promising despite economic uncertainties and worldwide supply deficit. Amid this, investing in quality oil stocks Enterprise Products Partners (EPD), Marathon Oil (MRO), and Plains All American Pipeline (PAA) could be ideal as global demand rebounds. Read more...

3 Tech Stocks Under $10 That Could Deliver Big Gains

The technology industry is booming, driven by breakthroughs and significant government investments. Thus, incorporating affordable tech stocks, Sprinklr (CXM), Sabre Corporation (SABR), and Cricut (CRCT) into your portfolio provides an accessible entry point to capitalize on the industry’s growth. Read more…

2 Concerns for Investors in October

The S&P 500 (SPY) may be touching all time highs...but recent action points to concerns on 2 fronts: inflation and earnings. Investment veteran Steve Reitmeister shares his views on these 2 timely topics along with a preview of his top stocks to buy now.

Read More Stories

More SPDR S&P 500 ETF Trust (SPY) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SPY News