Friends

Don’t let the Dow fool you, it was another pretty good day for stocks. The Dow was pulled down by one stock, United Healthcare, but the rest of the market averages all saw positive returns. Sentiment has changed very quickly as just a couple of weeks ago investors were concerned that tariffs would bring on a recession. Today’s April CPI report was the best we have seen in 4 years as retail prices rose 2.3% year over year. That could give the Fed cover should they decide that they do want to lower the Fed Funds rate. The only fly in the ointment for the bulls is the fact that interest rates along the yield curve continue to inch higher. Not a serious concern yet but could become problematic. And once again the Fed lowering the Fed Funds rate might not help anyway. For now though the bulls appear to hold the high ground.

As for today, by the close the Dow Jones Industrial Average was down 269 points to finish the day at 42,140. The S&P 500 was up 42 points to close at 5,886. The Nasdaq Composite Index was up 301 points to close at 19,010. Gold was up $27 to trade at $3,255 per ounce, while oil was up $1.71 to trade at $63.66 per barrel WTI.

One note about inflation numbers. Yes, the current rate of change in the CPI is the lowest/best we have seen since 2021 but remember that just means that prices are rising slower than before. Prices are not going down, and in reality, we really don’t want that to happen. That is called deflation and it’s a really bad thing. So, the Fed’s target of 2% inflation means they want prices to rise modestly over time. Yes, you might see prices for some items fall from time to time, but you don’t want to see that across the board. That would likely be because of job loss and demand destruction. See the Great Depression.

Anyway, have a nice evening everyone.