For stocks this was ‘the worst part’ of inflation report, says First Trust

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Major U.S. stock benchmarks remained down for the month on Wednesday, after a choppy trading session ended with mixed results as investors weighed the latest...

Major U.S. stock benchmarks remained down for the month on Wednesday, after a choppy trading session ended with mixed results as investors weighed the latest inflation report.

The Bureau of Labor Statistics said Wednesday that U.S. inflation rose 0.6% in August, as measured by the consumer-price index, and climbed 3.7% in the past 12 months as the year-over-year rate accelerated from 3.2% in July. “Rental inflation – both for actual tenants and the imputed rental value of owner-occupied homes – continues to run hot, up 0.4% for the month and running above a 5% annualized rate over three-, six-, and twelve-month timeframes,” they wrote.

Crossmark’s Doll said that expectations for S&P 500 earnings growth next year appear too strong, while companies may see “margin pressure” in the third quarter. Companies could have more trouble passing through price increases to the consumer, while their own costs, including labor and raw materials, risk going up more than their revenue, he said.

Wednesday’s close left the Dow down 0.4% so far in September, while the S&P 500 was off 0.9% and the Nasdaq had 1.6% losses month to date, FactSet data show.In the bond market, Treasurys rates fell in the wake of Wednesday’s inflation report, with the yield on the 10-year Treasury note BX:TMUBMUSD10Y declining 1.5 basis points to 4.248% while the two-yields BX:TMUBMUSD02Y slipped 1.9 basis points to 4.984%, according to Dow Jones Market Data.

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