With the July CPI data showing a decline in inflation from the multi-decade high level, the stock market rallied. The decline in inflation, a red-hot job market, and improved consumer sentiment have driven the benchmark indexes higher over the past few days.
However, the current level of inflation is still uncomfortable, which could prompt further interest rate hikes. “Rates still have to move higher even though in the very short run the market is reacting positively… Inflation is a bit more moderate, but inflation has not disappeared as a problem as yet,” said Chuck Lieberman, chief investment officer at Advisors Capital Management.
