More negative headlines. U.S. stocks are lower this morning after President Donald Trump said on November 12 that the United States would consider raising tariffs on China if a limited trade agreement isn’t reached. The statement weighed on the S&P 500 Index, which pared as much as 0.5% in intraday gains during Trump’s speech yesterday. However, stocks powered through the close, and the S&P 500 ended yesterday up 0.2%.
Drifting higher. Stocks have drifted higher over the past few weeks after breakthroughs on the trade and geopolitical front. The S&P 500 hasn’t posted two consecutive declines for 25 trading days, the longest streak since January 2012. Equities may continue to trend higher through a seasonally strong end-of-year period, but investors should be prepared for periodic volatility with a lot of optimism priced in.
Moderate (but manageable) inflation. Consumer inflation continued at a moderate (but manageable) pace in October. The core Consumer Price Index (CPI), which excludes food and energy prices, rose 2.3% year over year in October, slightly lower than September’s 2.4% year-over-year pace. Core CPI has increased at least 2.3% year over year for the past three months, the first time that’s happened since May 2012. We’ll dig more into the October CPI report today on the LPL Research blog, and analyze what renewed inflationary pressures could mean for the Federal Reserve’s plans.
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