Stock Market Investors: Ignore Inflation at Your Peril
Stocks moved higher again on Tuesday morning, and a big part of the reason for the renewed optimism on Wall Street came from the latest report on the Consumer Price Index (CPI). Many news outlets touted the lowest year-over-year inflation rate in over two years, seemingly sounding the all-clear for a new bull market to establish itself fully.
Bullish investors might well get a prolonged upward move in stock indexes, but it won't be because inflation has ceased to be a problem. Indeed, it doesn't take much digging into the May CPI data to see troubling signs of persistent inflationary pressures that could take a long time to settle out. And with the Federal Reserve's monetary policy group weighing what to do about interest rates during the two-day meeting that began Tuesday, there's a lot riding on which aspects of the latest report policymakers focus their emphasis on.
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Source Fool.com
