Who said September was traditionally a bad month for the stock market? I’m sure I read that somewhere, but I have to say, it just doesn’t seem to be the case this year. We’re ½ way through the month, and the stock market is up again today. In fact, with the exception of just a couple trading days with marginal losses, the stock market has been up every day this month. The key to being able to sustain this run is the lack of wild swings and triple-digit gains in a day. On Sept. 2, the Dow closed at 9,280 and at this moment it’s at an amazing 9,761 . . . an almost 500 point run up, or 5% in a month that was supposed to be a dog.
Today’s broad-based rally is underpinned by the positive economic reports that came out this morning. The big news was the Consumer Price Index for August which came in with an increase of .4%, slightly higher than the .3% anticipated. The core CPI was right in line with expectations. It’s rise of .1% is well within the parameters that the Feds like to see. Other minor economic data includes industrial production for August which climbed .8%, besting the expectations of .6% for which analysts were expecting. Capacity utilization for August beat the street with a reading of 69.6%, when an even 69% was expected. This latest report along with the tame CPI number from earlier this morning is giving the markets encouragement that inflation is under control. This is good for everyone.
Everything coming out today by means of economic reports points to a tame inflation and a recovering economy. Why shouldn’t equity traders get excited about that – as long as mortgage rates stay in check – and so far they have. If this rally continues today, we’ll likely see repricing as credit managers will move to hedge risk.