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US Stocks Fell Thursday as Inflation Hits 40-Year High
• US stocks fell Thursday. The latest consumer price index reading jumped 7.5% year-over-year — its highest gain since 1982. In turn, the 10-year US Treasury yield topped 2% after starting the year near 1.5%. The reading injected uncertainty into the markets as Wall Street tries to assess how aggressive the Federal Reserve will be in terms of raising rates to tame price increases.
• Jobless claims ticked lower, surprising analysts. Initial claims came in at 223,000, which is lower than estimates. The previous week’s number was 238,000. Market watchers argue this shows Omicron’s impact may be fading.
What to Be on the Lookout for Today
• The University of Michigan’s preliminary Consumer Sentiment Index is due for February. This number estimates future spending and saving rates. January’s index fell 4.8% from December, marking its lowest level since 2011. The university’s five-year inflation expectations on a preliminary basis for February will also be published.
• Dominion Energy (D) will post results for its most recent quarter. The Richmond-based power and energy company last reported earnings in early November, beating analyst expectations for earnings but missing on revenue. Some market observers maintain Dominion is benefiting from consistent capital investment, customer growth, and acquisitions.
Credit History and Your Score: What You Need to Know
Once good credit has been established, using it wisely and responsibly can offer flexibility and freedom. Lenders like to see that you’re an experienced, responsible credit user, which is why your length of credit history accounts for 15% of your credit score.
Lenders want to see accounts maintained in good standing for a long time. When debt accounts are closed, though, that history ends, and eventually closed accounts drop off the credit report entirely. A credit history looks better when it has a solid number of accounts in good standing that have been open for a long time.
One way to achieve this is to keep old credit cards open, even those not being used much anymore. Keeping these cards open, perhaps using them to automate a few bills like car insurance or a monthly subscription account, will signal that they are still very much in use. Paying them off on time and in full is still important to the health of a person’s credit. It might be wise to consider closing a card not being used regularly if the annual fees are so high that it isn’t worth it to keep the card open.
Track your credit score for free in the SoFi app, where the factors affecting your score are broken out to make them easier to understand.
A Few Headlines That Should Be on Your Radar
The top two companies in the ride-hailing industry are showing signs of recovery, but there are indicators Omicron’s enduring impact is keeping the process in low gear. Uber (UBER) reported a record number of active users during its most recent quarter, helping spur an 83% increase in revenue year-over-year. Meanwhile, Lyft (LYFT) missed analysts’ expectations for active users but beat on revenue thanks to higher fare prices. Read more >> For Coca-Cola and PepsiCo, higher prices seem to be no problem as revenue soared and earnings beat expectations. Both companies sprinkled in words of caution amid the upbeat reports. Coke (KO) executives expressed hope supply-chain issues will start to ease this year, but said there won’t be a full return to normal in 2022. PepsiCo (PEP) reports sales are holding on despite higher prices, adding revenue gains at Frito Lay helped boost the top line. Read more >> The latest announcements from the world of venture capital illustrate changes in shopping as well as business on the blockchain. Private fundraising is pouring into companies that offer “buy now, pay later” options for consumers, as well as technology that scans physical objects to show available inventory and product reviews. Finally, blockchain and Web3 remain some of the sectors fastest growing areas. Read more >> What credit score is needed to rent an apartment in 2022? Learn more about how your credit score can affect renting an apartment, and how you can approach renting if you have a lower credit score. Read more >>Not-So-Breaking News
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Twitter (TWTR) posted a downbeat report for the fourth quarter that failed to meet analyst expectations, coming up short on user growth, revenue, and earnings. The social media company also announced a new $4 billion share buyback program.
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Major automakers Ford (F), Toyota (TM), and General Motors (GM) have cut production at several of their factories in the US and Canada as a result of the trucker protest and border-bridge blockade. The production stoppage reportedly centers around the inability to get parts.
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It appears America's business leaders are less confident than the Federal Reserve when it comes to interest-rate hikes potentially getting inflation under control. In a recent survey, 75% of CEOs said upcoming rate hikes are unlikely to get inflation in check. Just 21% of respondents said the rate hikes will help cool the economy.
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Disney (DIS) reported stronger-than-expected earnings for its most recent quarter, saying its streaming service Disney+ added 11.8 million subscribers during that period. The number beat rival Netflix (NFLX) by over 3.5 million. Disney's amusement park revenues also doubled from the same period last year, with domestic attendance topping 2019 figures.
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Cereal maker Kellogg’s (K) beat analyst expectations on the back of higher prices, helping to overcome labor issues and increasing costs. Packaged food companies have raised prices as costs have risen for things like freight, corn, edible oils, and wheat amid ongoing supply-chain issues.
Financial Planner Tip of the Day
“Once good credit has been established, using it wisely and responsibly can offer flexibility and freedom. Installment loans like mortgages, car loans, and student loans might make it easier to reach major life goals, while credit cards for smaller purchases can help build credit and possibly qualify for lower interest rates on those big purchases.”
Brian Walsh, CFP® at SoFi