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New Report: Beginning of the End of "High Inflation" Worries?

New Report: Beginning of the End of "High Inflation" Worries?
Photo by Frederick Warren / Unsplash

Yesterday's selloff - and this morning's market rebound - are still playing out (in my view) towards a potential big rally starting next week.

At a little past 10am ET, we have the S&P 500 up 1%,  while the Nasdaq is up about 1.8%

The reason?

The headlines say that U.S. consumer prices rose 8.5% over the last 12 months - which isn't great obviously.

But investors are focusing on "core price growth" - which slowed to 0.3%. As a senior economist told Marketwatch this morning: "March will likely be the peak for inflation as the indices will be lapping some strong year-ago readings."

The benchmark 10-Year Treasury note saw its yield fall back a little as well, indicating perhaps an easing of inflation worries.

Overall, these are positive developments.  

Click to enlarge
Click to enlarge

Just remember we still have 3 more days of trading (including today's session) and then a long 3-day Easter/Passover weekend.

So it's not uncommon for Wall Street traders to sell into a day of strength like this, and slowly ease out of their positions - with an eye towards having less risk on their trading books over an extended holiday period.

Lastly - as I related briefly in the weekend update - we're coming up to the end of tax season. Lots of folks owe lots of capital gains taxes for last year's runup in stocks and crypto. That's not exactly a recipe for getting people heavily involved in the market until those taxes are paid and in the rear-view mirror.

To my mind, that's one more reason why the tax deadline day (next Monday, April 18th) may also turn out to be important for stock market watchers.

But if the markets can hold or above these general levels...13,800-14,000 for the Nasdaq 100 index, and roughly 4,350 for the S&P 500...heading into the holiday weekend, that's a positive sign of stability.

And maybe just maybe setting up a nice post-holiday rebound.