Opinion: This Is Why the New Inflation Report Is Sending Stocks Higher

Daniella Cressman

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Disclaimer: This information is accurate and true to the best of my knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

"Stocks jumped Wednesday morning after better-than-expected inflation data promised relief for consumers struggling to keep up with rising prices." —Malika Mitra

The Consumer Price Index increased by 8.5% from the year before.

"The consumer price index (CPI), a measure of price changes for a variety of goods and services, rose 8.5% in July from a year earlier, according to data from the Labor Department. It's a slowdown from June, when consumer prices increased 9.1% from the year before — the largest increase in four decades." —Malika Mitra

The S&P 500 jumped to 9.1%, thrilling investors.

"Investors, apparently, liked the latest inflation numbers. The S&P 500 jumped as high as 1.9% after the data was released on Wednesday morning, while the Dow Jones Industrial Average edged up around 1.6% and the Nasdaq Composite, more than 2%." —Malika Mitra

This is likely good news for the Federal Reserve.

"The lower-than-anticipated CPI data likely comes as welcome news to the Federal Reserve, which has been hiking interest rates to battle high prices." —Malika Mitra

Investors appear to be optimistic that the Federal Reserve will be able to slow down its interest rate hikes.

"Investors seem to be hoping that the recent data supports the notion that inflation has peaked, and therefore, that the Fed will be able to slow down its interest rate hikes." —Malika Mitra

That being said, there really are no guarantees and the Fed will likely have to see more consistency before deciding to lower interest rates—They have not made a decision yet.

"There is plenty of data expected between now and the next Federal Open Market Committee in September — when the Fed is expected to make a decision about the next possible rate hikes — she added. It's also important to keep in mind that even though inflation has slipped, it's still close to a 40-year high." —Malika Mitra

As always, your best bet is to hold onto your current investments instead of panic selling and ensure that you have a diversified portfolio, as well as a strong emergency fund.

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Canadian-American author writing about local politics, personal finance, & dining in Albuquerque.

Albuquerque, NM
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