The stock market closed with minor gains yesterday. The Dow Jones Industrial Average eked out a 16.08-point increase, while the S&P 500 and Nasdaq Composite gained 0.3% and 0.4%, respectively. Since the beginning of the year, the major market indexes have been experiencing substantial selling pressure on investors’ concerns about interest rate hikes by the Federal Reserve to tame multi-decade-high inflation, supply disruptions arising from the Ukraine-Russia war, rising energy and commodity prices, and the potential for a recession. All major equity indexes are down more than 9% year-to-date.
Many analysts believe that inflation might have peaked, and they expect flat inflation data for May. The May jobs data reflected a slightly slower pace of hiring compared to April, when payrolls rose by 436,000. The U.S. consumer price index moderated to 8.3% in April after advancing 8.5% in March, the highest level in 40 years. But economists believe the May CPI will remain flat. ING’s chief international economist James Knightley said that a second consecutive moderation in the annual rate should offer “hope that we have indeed passed the peak in inflation.” Indicators such as the decline in semiconductor prices, the spot rate of shipping containers, and fertilizer prices in North America are showing signs that inflation may have peaked.
