Whew, what a crazy day.
Consumer Price Index data told us that the inflation crisis is far from over. Yet the S&P 500 rose more than 2% during the day after initially dropping 2% after the bell. By one measure, this was the wildest trading session for the S&P 500 in data going back to 1983.
Are you feeling as seasick as I am?
Finding a signal is tough in this broad ocean of noise, especially when markets are essentially cheering for a downturn. Investors and the Fed seem to agree on one thing: We need to get inflation under control, even if it requires pushing the economy into recession.
So why are stocks and crypto fighting back after a grim inflation report? Well, markets probably got a little too fearful, leading to a lot of selling (and then buying back in, once markets bounced off the lows this morning). There wasn’t a good reason for the rebound. It just kind of happened.
Unfortunately, markets don’t always need a good reason to move the way they do. And as an investor, you have to process these wild up and down days that happen without explanation. Plus, vicious bear markets tend to look like this before something happens, and that something could be the early innings of a fierce rally you can’t afford to miss.
In these crazy days, it’s extra important to understand why you’re investing and what risks you can take. Don’t judge a market by one day, and remember that market moves could be suspect until the inflation problem is solved.
*Data sourced through Bloomberg. Can be made available upon request.