Economic Reports Show Inflation Cooling & Consumer Spending Slowing
In a recent economic update, it was revealed that inflation is slowing down while consumer spending is also losing momentum. These findings are likely to have significant implications for the Federal Reserve’s decision on interest rates and could potentially ignite a broader market rally. Let’s delve into the details of the economic reports.
The latest Consumer Price Index (CPI) and Producer Price Index (PPI) readings, along with the October retail sales report, were eagerly anticipated. The CPI reading for October was flat, falling short of economists’ expectations for a slight rise. Over the past 12 months, CPI has increased by 3.2%, which is also lower than economists’ projections of a 3.3% increase.
Meanwhile, core CPI, which excludes food and energy, rose by 0.2% in October and reached 4.1% over the past year. Although this matches economists’ predictions for core CPI, it is worth noting that core CPI is currently at a two-year low.
Tomorrow, the PPI reading for October will be released, and economists are anticipating negative numbers. Additionally, the October retail sales report, set to be announced on Wednesday, is expected to decline slightly.
The Federal Reserve has already demonstrated a dovish stance, acknowledging the cooling inflation. If there is further evidence of subdued inflation, it could prompt the Fed to begin cutting interest rates as early as December. Many investors on Wall Street are eager for such a move and believe that cool inflationary data coupled with a slowdown in consumer spending could fuel a broader market rally. Today’s market reaction seems to support this belief, as the S&P 500, NASDAQ, and Dow all experienced significant gains.
If you want your portfolio to benefit from this market strength, it is crucial to consider investing in fundamentally superior stocks. While market rallies can boost the value of these stocks, they also provide a level of protection during broader market sell-offs.
To help investors make informed decisions, a revised Portfolio Grader for 85 major blue-chip stocks has been released. Out of these stocks, 21 have been downgraded from a Buy rating to a Hold rating, and 25 have been downgraded from a Hold rating to a Sell rating. A list of the first 10 stocks to sell can be found below, providing investors with an opportunity to adjust their portfolios accordingly.
For those unsure of where to find fundamentally superior stocks, the Growth Investor service is recommended. The Growth Investor Buy Lists offer stocks with strong fundamentals, characterized by significantly higher sales and earnings growth than the S&P 500. These stocks trade at attractive valuations and have performed well during the recent earnings season, with positive surprises and upward revisions in earnings forecasts.
To ensure your portfolio is built on fundamentally superior stocks, consider joining the Growth Investor service. Subscribers gain access to a comprehensive array of resources, including Buy Lists, Monthly Issues, Weekly Updates, Special Market Podcasts, and much more.
As the economy shows signs of cooling inflation and slowing consumer spending, investors are looking for opportunities to navigate these changes successfully. By staying informed and focusing on fundamentally superior stocks, investors can position themselves strategically to weather market fluctuations and potentially reap significant rewards.