Naive Trader

Inflation data caused selling in bond and equity markets while investors kept an eye on a possible default from China’s Evergrande.

Producer Price Index data confirmed fears of continued high inflation for the month of October. We already expected indexes to pull back after a long streak of daily gains, but the inflation worries helped solidify the trend reversal.

The materials sector led stocks higher after the House passed a massive Infrastructure Bill late Friday night. Tesla weighed down the major indexes thanks to new tweets from Elon Musk over the weekend.

Positive employment data sent stocks higher in the morning. The rally faded mid-day, but indexes held on to new record closes. The employment report is especially favorable for small-caps that outperformed today.

Chip stocks led the day as investors focused on big tech and growth. The Nasdaq and S&P 500 continued a record winning streak.

The Fed’s statements after the two-day Federal Reserve meeting sent the major indexes to new record closes. The expected bond purchase tapering will begin, but the Fed was still firm on inflation being transitory, and they don’t see a need yet for interest rate hikes.

A great earnings season is keeping investors bullish even ahead of an anticipated announcement from the Fed on bond purchase tapering and interest rate hike timing. The result was another day of record-setting in the major indexes.

Small-caps soared today as the Russell 2000 nearly set a record close. Tesla helped carry the Nasdaq higher while the four largest mega-caps declined for the day.

Disappointing earnings from Apple and Amazon caused markets to dip in the morning, but it did not squash investor optimism. Three of the major indexes rebounded from the dip to end the day with record closes.

Optimism from positive earnings reports sent the Nasdaq and S&P 500 to a new record close today. However, evening earnings reports from Apple and Amazon may squash some of that optimism.