May 16, 2024

Stocks in the United States surged to test all-time highs after a slight dip in inflation. 

NAS-100-–-Daily-Chart-1NAS 100 – Daily Chart 

The NAS 100 was pushing through the all-time highs at 18,492 and will try to make a daily close above that for a potential breakout higher. Traders should be on alert for a false breakout or a double top. 

The US CPI report for April came in at expectations, with the annual rate for headline price growth falling to 3.4% from 3.5%, while the core rate declined to 3.6%. The core inflation rate has been at its lowest level for three years, and headline prices have stabilised from previous volatility. Monthly rates of price growth were also more moderate, with core and headline monthly inflation rates rising by 0.3%, the slowest growth rate since January. 

The latest data gives some hope that price growth is coming down in the US. The number was in line with expectations. However, traders were focused on weaker retail sales, which may force the Federal Reserve to cut interest rates earlier than expected. 

Advanced retail sales increased by 0% last month, while core retail sales, which exclude fuel, fell by 0.1%. 

Tech stocks found a broad-based rally, but the usual suspects led the charge, with Tesla, Nvidia, Amazon, and Apple gaining the most. 

Although stocks were surging on the latest inflation print, many analysts said before the release that they did not see any early action from the Federal Reserve.

“While this morning’s CPI report could spark some big near-term moves, we don’t anticipate turning bearish until it’s clear that either (1) the US is heading for recession, or (2) the Fed will hike to tame inflation,” Wolfe economists said. 

Fed Chair Jerome Powell reminded markets this week that even if inflation continued to decrease, it would likely be at a slower pace than desired.

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