Positive inflation data from the February Consumer Price Index (CPI) report has investors excited today. That’s thanks to year-over-year inflation of 2.8%, which was 0.1% lower than economists’ expectations and better than January’s 3% increase. Core inflation, which excludes volatile food and energy prices, was 3.1%, also 0.1% below estimates and lower than 3.3% last month.
On a month-to-month basis, February inflation increased 0.2% by both normal and core measures. That’s another win for the U.S. economy compared to experts’ estimates of a 0.3% increase in base and core inflation. It’s also an improvement from the all-items inflation of 0.5% and core inflation of 0.4% in January.
What This Means for the Stock Market
The CPI report is one of many economic measures the Federal Reserve uses to determine interest rate decisions. With inflation cooling more than expected, this could reignite interest in cutting rates. Recent sentiments from the central bank have leaned toward avoiding interest rate cuts. The Fed has kept rates high to temper inflation, with hopes of getting annual rates back down to 2%.
The Federal Reserve will meet next week to discuss interest rates. It’s incredibly unlikely today’s CPI report will result in an interest rate cut after that meeting. However, it could affect future meetings combined with other economic data, such as the Personal Consumption Expenditures (PCE) report that will be released on March 28.
What Investments Are Worth Buying Amid High Inflation?
Investors have taken an increased interest in safe-haven investments lately. That makes sense, as increased inflation and an ongoing trade war weigh on the stock market. This has them considering gold, government bonds, and stocks less affected by volatility. There are also plenty of buying opportunities, as traders use recent dips as entry points.
Stocks that analysts have called out as worth buying alongside market volatility include Reddit (RDDT), Nvidia (NVDA), and Capital One (COF). NVDA sports the best consensus rating at Strong Buy but RDDT has the most upside potential at 60.08%.
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