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Stocks Fall as Inflation Remains Near 40-Year High, with April CPI Higher Than Expected
• US stocks fell Wednesday as another whipsaw session ended with all three major indexes in the red. The latest inflation data was the main talk on Wall Street, all while investors are trying to predict how the Fed’s tightening monetary policy will affect the economy as a whole. Zooming out, it seems the market is struggling to find its footing as a series of economic headwinds weigh on sentiment.
• After a two-day slide, the price of oil rose. Energy markets have come under pressure recently amid the feeling China’s COVID-19 lockdowns could sap demand, but yesterday put a halt to that. Both international benchmark Brent crude and US standard West Texas Intermediate saw their price per barrel rise. Analysts say this is due to reduced gas flows from Russia to Europe, and the EU’s impending ban on Russian oil.
• April’s CPI showed inflation remains near a 40-year high, as prices broadly increased by 8.3% year-over-year. Wall Street had been expecting an 8.1% increase. Core CPI, which strips out food and energy prices, rose 6.2% year-over-year, marking a monthly increase of 0.6%. Economists have varying opinions as to whether or not inflation may be peaking
What to Be on the Lookout for Today
• Jobless claims are due after last week’s number hit 200,000. Claims rose by 19,000, the sharpest weekly increase since last July. April’s PPI for final demand will also be released.
• Six Flags Entertainment (SIX) will share its latest results. The amusement park company just announced plans to hire 15,000 seasonal workers across the US, which economists note will be a test of the teen labor force at a time when the broader jobs market is historically tight.
Credit History Length And Your Credit Score: What You Need to Know
You’re not born with a credit history; it has to be built over time.
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
If you’re looking for a clear sign of how the Fed’s tightening monetary policy is affecting the broader economy, check out mortgage refinancing activity. The New York Fed says Q1 2022 mortgage refinancing activity fell 15% from the previous quarter, and 40% year-over-year. That’s because mortgage rates are over two points higher on average, and it translates to significantly less liquidity in the economy. Read more >> Secondhand is the hottest fashion trend, but logistical and operational complexity leave consignors holding the bag. RealReal (REAL) and thredUp (TDUP) are being joined by traditional retailers as demand for resale items surge. The trend toward supporting environmental and governance concerns is taking the fashion world by storm. Read more >> SoFi’s Head of Investment Strategy’s key takeaway from April’s CPI reading was that even if inflation cools, it’s going to be sticky and uncomfortably high without a deeper pullback in demand. As investors, waiting for relief is really difficult — especially in an environment like this when it feels like we are persistently burning. But Liz is optimistic that the next two months can prove to be the last of the really hard part, and we can start to level out. Read more >> Between open houses and bidding wars, buying a home can be draining. Meanwhile, in-the-know and select clientele have the chance to tour and purchase properties before they even hit the market. The practice, known as pocket listings or whisper listings, is becoming more common in real estate. Read more >>Not-So-Breaking News
- Coinbase (COIN) reported a 27% decline in revenue, triggering a sell-off of its stock. The company has seen its user-base erode at a higher-than-expected clip amid increased expenses.
- Wendy’s (WEN) failed to meet Wall Street expectations on the top and bottom lines. Sales growth of 1.1% in the US market was less than half of consensus expectations.
- Krispy Kreme (DNUT) posted better than expected results on the top and bottom lines. The donut seller attributed its strong performance to limited-time holiday offerings. Share prices spiked on the news.
- Yeti (YETI) exceeded expectations for both profit and revenue. Executives said the company got a boost from drinkware sales, while cooler and equipment sales disappointed. Yeti also revised its 2022 outlook for profit and predicted sales will increase upwards of 20%.
- EVgo (EVGO) beat on profit but missed on revenue. The electric vehicle charging-network company added 129 stalls in the quarter to bring its total number either operational or under construction to 2,100.
Financial Planner Tip of the Day
“One place to begin when striving to nurture good financial habits is to write out individual money goals. Financial goals can serve as ‘external’ guideposts for kickstarting (and then sticking with) new habits.”
Brian Walsh, CFP® at SoFi