The Consumer Price Index (CPI) numbers came out this morning, and let’s just say they didn’t ruffle many feathers. The results were exactly in line with expectations across the board:
- Core CPI (MoM): 0.3%
- Core CPI (YoY): 3.3%
- CPI (MoM): 0.3%
- CPI (YoY): 2.7%
No surprises here, which the S&P and Nasdaq seemed to appreciate. Both markets welcomed the stability, but the Dow had other ideas. It’s been running contrary to the rest of the market lately, and today was no different.
So, why the divergence?
Breaking Down the Market Reaction
The S&P 500 and Nasdaq have been the standouts this year, each up around 27% year to date. That kind of performance makes them more sensitive to inflation news, and with no surprises in the CPI report, investors were happy to keep the party going.
Meanwhile, the Dow and the Russell 2000 have lagged behind, with yearly gains closer to 17%. The Dow, in particular, seems to be wrestling with second thoughts. Like it’s looking for a reason to join the rally but just can’t quite find the motivation.
Crude Oil’s Comeback
While CPI dominated the headlines today, crude oil quietly made its own move.
After the EIA report showed a 1.4 million barrel draw in crude inventories — offset by a 5 million barrel surplus in gasoline — you might have expected oil prices to sag. I sure did.
Instead, crude perked up and reclaimed the $70 level.
It’s a small but notable bounce that shows the market might be looking past short-term data to focus on longer-term supply and demand dynamics.
What’s Next?
With CPI in the rearview, all eyes now turn to the Producer Price Index (PPI) tomorrow at 8:30am Eastern. PPI doesn’t get the same level of attention as CPI, but it can still move the markets, especially if it comes in hotter or cooler than expected.
For now, it’s worth keeping an eye on this growing divergence between the big indexes. Will the Dow and Russell find their footing, or will they continue to march to their own beat?
As always, patience and perspective are key. Let’s see what tomorrow brings.
— Geof Smith
P.S. One thing that’s consistently been on fire this year is gold… and my next big prediction is already playing out. Check it out here.
