Small Market Increase Follows Most Recent Stock Losses
The small market increase follows the most recent losses experienced by stocks since June of last year.
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The stock market rose slightly Wednesday morning following better than expected wholesale inflation data. This is a positive sign for the economy, as it indicates that prices are rising at a slower rate than anticipated. However, investor fears remain after the market suffered its worst day since June 2020 following a dismal consumer price index reading. This indicates that consumer prices are rising at a faster rate than expected, which is cause for concern.
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It's clear that the market is in for a rough ride in the near future, thanks in large part to the false sense of security that investors have been lulled into. With inflationary pressures on the rise, it's only a matter of time before the market corrects itself. So, while the short-term outlook may be bleak, investors would be wise to stay the course and remain patient.
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The Federal Reserve is expected to get more aggressive following the latest inflation data, including a potential 100 basis-point rate hike. This would be a significant increase from the current 75 basis points that is expected later this month. Quincy Krosby, LPL Financial’s chief global strategist, said in emailed comments Tuesday that the Fed “is likely to maintain its hawkish stance, or perhaps [become] more assertive.” This aggressive stance could have major implications for the economy, so investors will be closely watching to see what the Fed does next.
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Bitcoin prices took a big hit today, dropping nearly 10% to around $20,000. It was the cryptocurrency's worst day since June, and it's sure to cause some concern among investors.
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The S&P 500 is facing its biggest drop this year as inflation remains stubbornly high. This is bad news for investors, as it indicates that the economy is not doing as well as hoped.
Inflation continued to rise in August, but at a slower pace than in recent months. Gas prices were a major factor, as they plunged compared to last month. This helped to offset some of the other rising costs, such as food and housing.