The Buzz on Business for March 18th 2024

Lots of red numbers on the Giant Quote machine on Friday, but, to be honest, while stocks are down since the unexpectedly hot inflation numbers came in on Thursday, they’ve actually held up pretty well, all things considered.

An economist we follow wrote about the PPI report from last week, and perhaps he’s on to something. Something that explains the market’s resilience.

Stock Market Report

Stocks finished mixed but mostly lower on Friday

• • The Dow Jones Industrial Average was off 1/2 of 1%. That’s 191 points, and it closed at 38,715.

• • The S&P 500 was down seven-tenths of a percent and closed at 5117, off 33 points.

• • The NASDAQ composite had the worst of it. It was down a full percent, 155 points, and closed below 16,000 at 15,973.

• • Once again, the small caps outperformed the broad market. The Russell 2000 was up. Not much, but hey! A win is a win. It was up one-tenth of a percent. That’s three points and closed at 2044.

Bond Market Report

Rates were up on Friday.

• • The 2-year treasury closed at 4.730%. That’s up three basis points.

• • The yield on the 20-year was up one tick and closed at 4.553%.

Oil, Gold, and Bitcoin

• • Oil was off a minuscule three cents. And a barrel now changes hands at $80.51.

• • Gold was off $6.00 and closed at $2161.50.

• • At 4:00 PM Eastern Time Friday, Bitcoin closed at $69,033.39, off $376.12.

Should the Inflation Data be Ignored?

Economist Scott Grannis, who blogs at Calafia Beach Pundit, we’ll put a link in the show notes, believes and wrote persuasively that Thursday’s numbers were an anomaly, a statistical artifact, and, if the Fed had any sense at all, they would not delay long-anticipated rate cuts.

Grannis may be the only economist that we trust here at The Buzz on Business, but we’re not so sure he’s right. We certainly don’t think that the time is right for rate cuts. In many ways, inflation is more a psychological than a financial phenomenon. When the numbers come in hot, as they have in recent months, expectations for future inflation necessarily rise. These numbers may be an anomaly, but they are factored into the decision-making of hundreds of millions of consumers out in the marketplace every single day.

At best, we think the Fed should wait and see. But. We would not be surprised if rates do not come down for the rest of 2024.

And that that may be the wisest course.