Key Takeaways
- Quiet Week For Stocks So Far
- Inflation Signals Appear To Be Easing
- Debt Limit Talk Seem To Be Making Progress
As we close out the second week in May, stocks appear to already have left on summer vacation. On Thursday, the S&P 500 dropped 0.2% and the Nasdaq Composite gained 0.2%. For the week, the S&P is down 0.1% while the Nasdaq is up 0.7%.
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Inflation concerns seem to be easing as this week’s CPI and PPI number were pretty much in line with expectations. The lack of a big surprise one way or the other left investors with little reason to be more or less optimistic about the inflationary picture. However, Fed Governor Michelle Bowman threw some cold water on hopes the Fed’s current rate hike cycle is over. Speaking at a symposium in Germany yesterday, Bowman said that while inflation seems to be slowing, she felt rates still needed to move higher and stay there for an extended period of time.
If you’re looking for signs inflation is easing, oil makes a pretty compelling case as it is on track for its fourth consecutive down week. At some point, hopefully, that drop in price will begin showing up at the pump where the average price for a gallon of gas according to AAA is $3.54, up $0.01 from last week.
On the debt talks front, President Biden and Speaker McCarthy postponed a meeting that had been scheduled for today until next week as their aids work on a deal. This is likely a good sign for markets that progress is being made at the staff level. Markets seem to be taking this as a positive development as well. The VIX continues to remain low and is below 17 in premarket activity.
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Elsewhere, shares of Facebook parent, Meta, are trading slightly higher in the premarket. The company announced it would begin using AI powered ad tools. It seems these days the mention of AI is immediately taken in a positive way by markets. We saw a similar phenomenon not long ago with the use of “blockchain” and before that, the adding of “.com” to a company’s name. While AI may prove itself to be a game changing technology, investors may want to take a second before getting overly caught up in the hype. I would simply continue sticking with your investment plans and long term objectives.
Finally, to all the moms out there, I just want to wish you a very Happy Mother’s Day. As a kid myself, I know we don’t say it nearly enough, but we love and appreciate all you do for us. Whether you’re spending the day doing nothing or attending one of your children’s graduations, I hope you have a wonderful day.
tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.
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