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Stocks Sell Off Amid Highest Inflation Since 1981, Consumer Sentiment Hits Record Low
• US stocks fell Friday as the market reacted to the latest inflation data. Prices continue to rise at their fastest rate in 40-years, while the University of Michigan’s consumer sentiment plunged to a record low.
• The May CPI checked in at 8.6%, year-over-year. That’s the highest level recorded since 1981. Broadly speaking, US consumers continue to face higher prices for things like food, energy, and rent.
• Traders may be pricing in future rate hikes from the Federal Reserve. The central bank has already raised rates twice this year and started to offload assets from its balance sheet. As prices continue to rise, the Fed will release its latest policy statement midweek. Some worry hawkish monetary policy amid slowing growth could tip the economy into a recession.
• Gasoline prices are nearly $5 per gallon on average for the first time in US history. Economists contend this can also contribute to a broader slowdown given energy prices are significant contributors to inflation.
What to Be on the Lookout for Today
• The New York Fed will release its consumer inflation expectations for May. The survey looks at where people see prices heading over the near and medium term. In April one-year median consumer inflation expectations declined 0.3%, month-over-month. This means consumers expect inflation to slow its pace slightly over the next 12 months. Three-year median inflation expectations rose 0.2%.
• American software company Oracle (ORCL) hands in its latest report card. Last week the firm closed on the $28 billion acquisition of Cerner (CERN), marking its move into the healthcare space.
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A Few Headlines That Should Be on Your Radar
The grocery sector is juggling a series of challenges amid high inflation and changing consumer spending habits. Supply chain issues and inventory management are points of focus. This week Kroger (KR), the nation’s largest grocery chain, shares its latest quarterly earnings. Kroger ranks behind only Walmart (WMT) in terms of the largest US retailers. Last month, a negative report from Walmart set off alarm bells in the retail sector. Investors may be tracking Kroger’s results in a similar way. Read more >> Apple (AAPL) has announced its launch of a buy now pay later program. This may be good news for shoppers, but for industry pioneers like Klarna and Affirm (AFRM), not so much. Rising interest rates have presented serious headwinds to players in the space. Now as Apple enters the sector, the pioneers have another reason to fear for their bottom lines. Read more >> Following surging demand for pets during the pandemic, spending on furry friends remains strong. Americans seem to be putting their animals at the top of their list of budgetary priorities. While the spend on things like home exercise equipment and streaming services appear to be reversing as the pandemic eases, Americans are spending freely on their pets. Read more >> For many Americans, not having enough saved up for retirement is a real fear. Which state you live in can have a major effect on how much you need, too. Here are the average retirement savings by state. Read more >>Not-So-Breaking News
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Several news organizations face a potential revenue shortfall as a result of Meta Platform’s (FB) altered thinking. Reports say the social media giant is re-examining how much it pays for news content. The New York Times (NYT), Washington Post, and Wall Street Journal (NWSA) have all received millions of dollars from Meta according to reports.
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Online personal styling service Stitch Fix (SFIX) offered weaker-than-expected guidance and announced its cutting nearly 15% of its salaried positions. Company executives say the move is part of a plan aimed at returning to profitability.
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Southwest Airlines (LUV) said it’s closing its reservations centers and going fully remote. This will take effect September 1 although many reservations agents have been working from home since the start of the pandemic. Union officials claim Southwest didn’t consult them prior to the decision.
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According to a poll from Bloomberg and WorkJam millennials are more likely to quit their jobs than Gen X or Gen Z workers. The survey found two-thirds of hiring managers agreed with this assessment. Job turnover is at an all time high during what economists have called the Great Resignation.
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The median listed monthly rent for an available apartment in the US went over $2,000 for the first time ever. That’s per a report from Redfin (RDFN) that says rents are up 15% year-over-year. In cities like Austin, Cincinnati, and Seattle rents are 30% higher than this time last year.
Financial Planner Tip of the Day
“Many checking accounts charge monthly maintenance fees, but you may be able to have them waived if you can meet certain requirements. Most commonly, you can skip the monthly fees if you set up direct deposits or maintain a certain account balance.”
Brian Walsh, CFP® at SoFi