Stocks End Lower After Hotter Than Expected Inflation Report  Image: Bigstock Stocks closed lower yesterday after a higher than expected CPI report showed inflation at fresh 40-year highs. Headline inflation for June was up 1.3% vs. the consensus for 1.1%. That was also higher than May's increase of 1.0%. On a year over year basis, it was up 9.1% vs. estimates for 8.8% and May's 8.6%. Core inflation, which excludes Food & Energy, was up 0.7% m/m (vs. the consensus for 0.5% and May's 0.6%), and 5.9% y/y (vs. the consensus for 5.8% and May's 6.0%). The hoped for drop in the headline number, based on recently falling oil and gas prices, didn't materialize in June's reading, as it was even hotter than before. That could show up in July's reading. But for now, unfortunately, with the core number remaining elevated, and coming in higher than excepted, concerns that inflation is becoming entrenched are growing. Stocks managed to bounce well off their intraday lows, even turning positive a few times during the day, before slipping modestly back into the red. Last month's sell-off lows continue to hold. That's a positive sign. But the market will need more to build on that. With earnings season beginning, that could very well be the catalyst the market needs. With financial stocks on deck, that could give us further insight into the strength of the economy. But this earnings season, traders will be looking at not just Q2's results, but what forward guidance will look like for Q3 and the full-year. There's lots of optimism that the second half could see a strong rebound in GDP. If so, that should be reflected in the company's guidance.
In spite of a tough first half, there are plenty of positives in the market that have been virtually ignored. And eventually, the market will have to take notice. Especially with valuations having fallen to more than 2-year lows. And many are racing in to grab those bargains while they can. But you need to know what to look for. If you're searching for new stocks to get into at these low prices, then be sure to read our latest commentary...
How To Trade The Current Bear, And Plan For The Coming Bull Best,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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