Stock Market Performance Reaches Record Highs With Risk

As of today’s reports, U.S. stocks on the stock market are currently climbing toward record highs, as Wall Street continues seeing various shares gain value. The S&P 500 rose 0.3%, approaching its most recent all-time high from last Wednesday.

The primary catalyst for this increase is being attributed to hopes and predictions of how recent data shows signs of relief from rising prices and inflation. The Consumer Price Index (CPI) fell 0.1% from May, lowering the annual inflation rate to 3%, the first decline since May 2020, thanks to falling gas and car prices. The core CPI rose only 0.1%, bringing core inflation down to 3.3%.

Shelter costs are also easing, increasing just 0.2% in June. Retailers are cutting prices to attract cost-conscious consumers, creating increased competition. However, auto insurance rates surged by 19.5% over the past year, averaging nearly $2,300 annually due to rising repair costs and riskier driving behaviors. These rising costs are straining household budgets and impacting the car-buying season, with rates expected to continue rising but stabilize by 2025.

Furthermore, stocks benefiting from a potential Trump re-election were among the best performers. Trump Media & Technology Group, behind the Truth Social platform, surged 31.4%. Bitcoin also exceeded $63,000, influenced by Trump’s portrayal as a crypto-friendly candidate and surviving an assassination attempt over the weekend.

However, while U.S. economic growth is generally seen as positive, some investors are concerned it could lead to reaccelerated inflation. The Federal Reserve has raised interest rates to a 23-year high to combat inflation, increasing borrowing costs across the board. Although a rate cut is anticipated in 2024, rates remain unchanged as officials seek more evidence of cooling inflation.

Economic expansion could jeopardize the Fed’s progress. Mark Malek from Siebert Financial noted that a potential second Trump presidency could bring expansionary policies, lower taxes, and less regulation, raising the risk of renewed inflation if growth accelerates too quickly.