These Five Sectors Are Poised to Thrive as Inflation Eases
By John Persinos
We didn't get any nasty surprises Friday on inflation. In the current scenario, whereby inflation is moderating and the Federal Reserve is likely to lower interest rates, certain sectors of the stock market are poised to benefit more than others. Below, I examine five key sectors that investors should consider now.
But first, let's look at the latest inflation numbers. Coming on the heels of April's favorable consumer price index (CPI) data, Friday's PCE report showed a welcome trend.
The U.S. Bureau of Economic Analysis (BEA) reported Friday that the personal consumption expenditures (PCE) price index at the "core" level (excluding food and energy costs) increased only 0.2% in April, in line with analyst expectations. On an annual basis, core PCE was up 2.8%, or 0.1 percentage point higher than the estimate.
Including the volatile food and energy category, PCE inflation was at 2.7% on an annual basis and 0.3% from a month ago. Both numbers were in line with estimates.
Fed officials prefer the PCE reading, which accounts for changes in consumer behavior such as substituting less expensive items for costlier alternatives. The core level is given particularly close scrutiny. The central bank looks for underlying long-term price trends that aren't distorted by short-term "noise."
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