USA stocks open lower as CPI underlines inflation fears

Closing Indexes Summary Feb 12

Energy companies got some relief as oil prices turned higher.

This means that there's no seasonal bias against the months leading into May, when professional market players quite famously run away and don't come back until September on St. Leger's Day.

This morning, the Dow Jones Index was again positive ahead of the close (up about 55 points with two hours to go) but as we learnt last week, anything can happen in the last hour before the close.

Among early movers, Chipotle Mexican Grill Inc gained more than 10 percent in premarket trading after the company hired former Taco Bell head, Brian Niccol, as the new chief executive.

"Investors are in a buy-the-dip mindset", Stovall said, referring to bargain hunters taking advantage of the recent decline in lofty share prices. The 30-stock index also erased all of its 2018 losses. On top of that, the Federal Reserve typically responds to higher inflation by hiking interest rates, ending the easy money days that have fueled a 9-year stock market boom.

On a like-for-like basis revenue per available room - known as RevPAR in the hotel trade - rose 3.8% in the fourth quarter, driven by increases in the average daily rate - hotel room revenue divided by the total number of room nights sold for a given period - and occupancy. If those people who believed there were only three rises coming now fear it might be five, that's a big miscalculation for them. Those stocks are often compared to bonds due to their big dividend payments and relatively steady prices, but investors find them less appealing when bond yields are rising. If the inflation is too high or the market rates are high, it could send the markets on a down.

Wall Street surged on Wednesday as investors shrugged off stronger than expected inflation data and snapped up shares of Facebook, Amazon and Apple.

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Oliver Jones of Capital Economics said that his firm believes inflation in the United States will rise "before long", with core inflation rising to about 2.2pc in the spring, and continuing to rise after that. It's important as Tom Essaye, founder of The Sevens Report, told CNBC overnight.

The yield on the 10-year Treasury held steady at 2.91 percent.

Analysts said worries about the CPI report also were countered by disappointing retail sales data, showing an unexpected 0.3 per cent drop last month, which could weaken the case for more aggressive Fed tightening. "The core PCE, which the Fed thinks is better, is even lower, well below 2 percent". "Expectations of future inflation are a key determinant of actual inflation because they serve as an important benchmark for the wage demands of workers and the pricing decisions of businesses", he said in a speech last week. "Investors across all asset classes need to pay attention to these signs of overheating because the risks are rising that inflation could appear a lot faster than what the Fed and the market now expect".

Some market watchers say the recent bout of turbulence may not be over. And this should eventually show up in higher stock prices.

U.S. INFLATION: U.S. consumer prices, excluding the volatile food and energy categories, rose 0.3 percent last month, the most in a year.

The Standard & Poor's 500 index rose 35.69 points, or 1.3 percent, to 2,698.63. That would hurt consumer confidence, and slow investments and spending. Stocks are still well below the record highs they set three weeks ago. "But if I include the additional supply of U.S. corporate debt in USA wholesale market to a model, I get a fair value of 6300 points". But as a former North Bondi lifesaver, who once captained a patrol with the PM on my team, I'll be closely looking for sharks that could ruin our swim with stocks!

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