Topline
The stock market moved higher on Friday—extending this week’s rally—despite consumer prices surging 6.8% last month, the highest inflation reading in nearly 40 years, according to data released by the Labor Department.
Markets moved higher even after more bad inflation data.
Richard Drew/ASSOCIATED PRESS
Key Facts
The Dow Jones Industrial Average rose 0.4%, around 150 points, while the S&P 500 gained 0.6% and the Nasdaq Composite 0.4%.
While markets took a hit after the first case of omicron was reported in the United States last week, stocks have recently bounced back as investors grow less fearful about the Covid omicron variant.
Even a bad inflation reading on Friday wasn’t enough to spook investors: Consumer prices rose 6.8% in the 12 months ending in November, according to Labor Department data, which shows inflation at a nearly 40-year high.
Some investors who expected an even higher inflation reading were relieved by the news and sent stocks up, while others remain optimistic about the ongoing economic recovery boosted by a strong labor market recovery.
Shares of tech giant Oracle jumped nearly 20%, a day after beating quarterly earnings estimates, while shares of at-home fitness company Peloton added to the previous day’s losses, falling over 2% on Friday.
Vaccine maker Moderna’s stock, meanwhile, fell over 10% as investors await more data and updates on the efficacy of the company’s Covid treatments against the omicron variant.
Key Background:
After the emergence of the omicron variant led to a sell-off last week, stocks are now on pace for a solid weekly rebound. All three major indexes have risen by around 3% or more so far this week as investor concerns about the new variant abate amid news that vaccines are effective against it.
Crucial Quote:
“The inflation print from this morning will reinforce the Fed’s resolve to accelerate tapering,” predicts Anu Gaggar, global investment strategist for Commonwealth Financial Network. “With the strength in the economic recovery, it is time to take the crutches away,” he says, adding, “supply and labor shortages will keep aggregate prices elevated for longer, keeping inflation higher than the Fed target for a while.”
What To Watch For:
While December has historically been a great month for the stock market, the new omicron variant is causing “major volatility” and complicating the inflation outlook, says Ryan Detrick, chief market strategist for LPL Financial. Despite the myriad of challenges facing markets in 2022, he remains “optimistic” that stocks will finish the year on a solid note.
Further Reading:
Inflation Spiked Another 6.8% In November—Hitting 40-Year High As White House Tries To Temper Price Concerns (Forbes)
Stocks Rally For A Second Day—Dow Gains 500 Points—As Investors Shake Off Omicron Fears (Forbes)
This Vaccine Maker Can ‘Dominate’ The Covid Market For Years To Come, Wells Fargo Predicts (Forbes)
The Number Of Americans Filing For New Unemployment Benefits Just Fell To A 52-Year Low (Forbes)