Stocks popping as inflation cools
The market loved the latest CPI data...and there is an interesting mix of red hot stocks trading at all-time highs.
Investors are excited about the latest CPI data. And while 3% year-over-year price increases (with a 4.8% jump in the so-called core number) is still higher than normal…and above where the Federal Reserve would like inflation to be at…the trend is still going in the right direction. The 3% YOY rise in overall CPI is the smallest gain since March 2021.
There is now a growing hope that the Fed may only need to raise rates one more time later this month and will then be able to pause in September…and perhaps even begin to cut rates in early 2024. No wonder then that stocks are surging Wednesday.
It’s still up for debate whether or not the economy can avoid a recession following the series of Fed rate hikes. But I find it particularly interesting to see what stocks are now trading at record high levels as Wall Street euphoria is once again at Extreme Greed levels.
Here are some of the large cap, blue chip stocks that hit new all-time highs Wednesday, according to Barchart.
TJX
MasterCard
Pulte
Lennar
Toll Brothers
Owens Corning
Booking Holdings
Deckers Outdoor
O’Reilly Automotive
AutoNation
There’s a trend here. All of these companies are a bet on the US consumer continuing to spend…on clothes and household goods at places like TJMaxx and Marshalls, on used and new cars from AutoNation and parts they buy at O’Reilly, and on UGGs and Hoka sneakers from Decker. With their credit and debit cards.
The all-time high club is also chock full of companies that should benefit from a strong housing market. Builders are doing all they can to meet demand for new houses as many Americans are still looking to buy homes even as interest rates rise. That’s helping fiberglass and insulation giant Owens Corning too.
Finally, take a look at Booking. The company owns travel related giants Priceline and Kayak, as well as its namesake brand. It’s also the parent company of restaurant reservations leader OpenTable.
Yes, the US economy may eventually start to lose some momentum. But for now, Wall Street clearly isn’t betting that’s the case. Investors still believe the US consumer will shop (and take vacations and buy houses) until they drop.