Inflation Just Smacked the Stock Market Again. What Can Investors Do?
Friday morning had investors closely watching the latest report on the consumer price index (CPI), as they were hoping to see signs that inflation might finally start to peak. Unfortunately, that didn't happen, as a 1% rise in the CPI for May brought the year-over-year increase in the index to 8.6%, the highest in more than 40 years. Stock market investors didn't like that nasty surprise, and futures markets fell sharply after the announcement. As of 9:15 a.m. ET, futures on the Dow Jones Industrial Average (DJINDICES: ^DJI) had fallen 412 points to 31,851. S&P 500 (SNPINDEX: ^GSPC) futures had dropped 57 points to 3,959, and Nasdaq Composite (NASDAQINDEX: ^IXIC) futures had lost 204 points to 12,071.
Those moves might not seem all that big, but they came even after nervous investors had already bid down stock prices substantially on Thursday. Given that the bond market has also reacted negatively to inflationary pressures, many investors feel like there's nothing they can do to protect themselves. However, there are some things to look at in your investment portfolio that can offer a viable strategy over the long run.
The latest report from the Bureau of Labor Statistics revealed many culprits for the rise in prices. The most obvious one for most consumers was energy, as gasoline prices rose 4.1% during the month. Food prices were also notably higher, rising 1.2% between April and May.
Source Fool.com
