Stock Market Unaffected by Increase in CPI


The market closed up more than 250 points at the close of trading on Valentine’s Day.

The Consumer Price Index report was released early Wednesday morning, sending stocks downward initially in the day.

The CPI increased by .05% in January, causing concern among investors about rising inflation.

“The market likes what is called a ‘Goldilocks economy,’” says KTRH money man Pat Shinn with Heritage Asset Advisors. “One that is neither too hot nor too cold, but just right. Markets are starting to fret a little bit that maybe that porridge is just a little too hot.”

The increase was driven by rising costs for food, gas, clothing, rent, and auto insurance.

Shin says loans pegged to short-term interest rates will be the first to feel the impact. “If you have a construction loan and it’s tied to the prime rate then that rate is going to go up; if you have an adjustable rate mortgage that’s tied to short term rates, the next time it adjusts it’s going to go up,” counsels Shinn.

It’s not all dark clouds, says Shinn. There is a small upside. “If you’ve got money in a savings account, a money market account, you’re going to see that rate go up probably one percent over the next year.”


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