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SPDR S&P 500 ETF Trust (NYSE: SPY) traded lower by 1.7% on Wednesday after the U.S. Consumer Price Index rose 4.2% in the month of April, its largest increase since September 2008.
April’s inflation increase exceeded consensus economist estimates of 3.6%.
Fed Not Alarmed: Federal Reserve vice chairman Richard Clarida said investors should expect inflation numbers to temporarily rise further in coming months as the U.S. recovers from the pandemic. However, Clarida said inflation should moderate in the second half of 2021.
“These one-time increases in prices are likely to have only transitory effects on underlying inflation, and I expect inflation to return to or perhaps run somewhat above our 2% longer-run goal in 2022 and 2023,” Clarida said.
Inflation ramped up the quickest since 2008 last month, with the Consumer Price Index surging 4.2% from a year ago, compared to the Dow Jones projection of a 3.6% increase. The monthly gain was 0.8%, versus the anticipated 0.2%.
The Core CPI Is Spiking
Excluding volatile food and energy prices, the core CPI spiked 3% from the same period in 2020 and 0.9% on a monthly basis. The respective estimates were 2.3% and 0.3%.
“The markets have been hovering around all times highs with a lot of the reopening trade already priced in. So it’s not out of the question that the outsized inflation read could bring us back down to earth a bit,” said Mike Loewengart, managing director of investment strategy at E-Trade.
General John Kerry Davis Laid to Rest at Arlington National Cemetery Photo By Lance Cpl. Tanner Lambert | Body Bearers with Bravo Company, Marine Barracks Washington, fold a flag during a full honors funeral for Gen. John K. Davis at Arlington National Cemetery, May 6, 2021. General Davis, who served as the 20th Assistant Commandant of the Marine Corps, was born March 14, 1927 and died on July 31, 2019. General Davis was a highly accomplished aviator, flying more than 30 different aircraft throughout his distinguished career. He flew 171 combat missions during the Vietnam War, totaling more than 285 combat hours. He assumed the position as the 20th Assistant Commandant of the Marine Corps on July 1, 1983 and served in this role until his retirement on June 1, 1986. (U.S. Marine Corps photo by Lance Cpl. Tanner D. Lambert)