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Inflation slows in April: CPI report


Inflation slows in April, gas and housing prices still up in latest CPI report

03:00

Wall Street advanced into uncharted territory on Thursday, with the Dow Jones Industrial Average topping 40,000 for the first time after a blowout earnings report from Walmart cast a positive light on the economy fueling corporate America.

“The more important messaging from achieving one of these milestones is that corporate America is in pretty good shape,” said Art Hogan, “It’s like getting a gold star in school — guess what, things are okay.” 

The Dow hit the historic mark as Walmart jumped 6% after delivering robust first-quarter results, with the index lately up 85 points, or 0.2% at 39,995. The big-box retailer reported a large jump in e-commerce sales as well as making inroads with high-income shoppers. 

“These are not inflation-driven results,” Walmart CEO Doug McMillon told analysts on an earnings call.

The S&P 500 and Nasdaq Composite also rose to record heights before paring their gains, each lately up less than 2%.

A slowly cooling but still resilient economy has been underlying corporate earnings even as expectations of five or six interest rate cuts by the Fed this year have ebbed. Odds of a rate cut in September increased some after data released on Wednesday showed a slight moderation in consumer prices in April.  

“The reestablishment of a disinflation trend in the coming months should allow the Fed to start easing policy in September,” according to Solita Marcelli, chief investment officer Americas, UBS Global Wealth Management, who still expects Fed cuts of 50 basis points in total this year.

“Investors have been willing to forego multiple rate cuts in lieu of a better economic backdrop that is driving corporate earnings,” said Hogan. “We’re in a better place if we don’t need the Fed to come to the rescue.” 

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