Markets initially cheered by bidding stocks higher, after the U.S. posted weaker inflation. Import prices fell by 0.2% in June. This is down 6.1% Y/Y.
The Consumer price inflation rose by 0.2% in June, up by 3% Y/Y. This is the lowest level since March 2021. Excluding food and energy,
core CPI, a measure that the Federal Reserve watches closely, increased by 0.2% and 4.8% Y/Y. Unfortunately, this is above the Fed’s 2.0% target. Now that money market funds pay over 4%, stock markets will lose investor interest. The magnificent seven stocks, including Nvidia (NVDA), and Meta Platforms (META) offered 211% and 156% in 2023 alone.
The magnificent returns are too good to be true. The chances of a correction in those top performers are increasing. Apple’s (AAPL) nearly $3 trillion market capitalization masks the market’s weakness. Profit-taking in any of the mega camp firms would spread to the rest of the market.
The sentiment is the primary driver of the 2023 stock market. Big tech firms posted falling revenue but shares still rose. Cautious investors may suddenly turn bearish. They may doubt profit margin stabilizes after those firms already cut jobs and associated costs.
Be wary of the market’s gains. Wait for a pullback before even looking at buying stocks at 52-week highs.
