The much-anticipated consumer price index report came in higher than expected, but the market quickly shrugged it off. Bonds -- as seen in the iShares 20 Plus Year Treasury Bond (TLT) -- dipped on the news and then jumped higher and closed strong.
Equities were choppy and sloppy, but there was a positive bias to the action. Breadth was just slightly positive with around 4,200 gainers to 3,700 gainers, but it was higher-priced, more conservative names that did well. The meme stocks sold off hard as GameStop (GME) led the way with a 25% hit. The speculative stocks that led early in the week were mostly down on the day.
Another sector that suffered Thursday was financials. The Financial Select Sector SPDR exchange-traded fund (XLF) suffered its biggest loss since April 22. Banks tend to do better during inflationary periods as they have a better yield curve for lending, but the CPI news failed to ignite any real worries.
The Russell 2000 ETF (IWM) was a laggard, but it has been outperforming recently, so this looks like some routine profit-taking rather than a shift in character. It will take more aggressive selling than this to have a negative impact on the technical pattern.
From a trading standpoint, the most notable thing about the action is how stock picking is shifting fast. The meme chasers suffered some hard hits, and the bounce in special purpose acquisition companies and some of the Russell additions fizzled out, but there were still a few dozen names with moves of more than 10%.
The market is not bad, but to navigate will require much more selective stock picking.
Have a good evening. I'll see you tomorrow.