The September inflation report came out this week and showed that the annual inflation rate rose from 3.4% to 3.7% last month. A 9.1% surge in gasoline prices accounted for more than half of the increase in the CPI over the month of September. Stripping out food and energy, the core inflation rate rose from 2.4% to 2.6%.
With the cost of living rising, the Social Security Administration announced a 3.6% cost-of-living adjustment for Social Security and Supplemental Security Income benefits for 2027.
As for how this news affects the Fed and interest rates, odds are still high for the Fed to leave interest rates alone this month but raise rates 0.25% in December.
AI and semiconductor investors were spooked this week as concerns are rising over higher borrowing costs to fund the AI infrastructure buildout. Over the past 5 days, the semiconductor index (gold) has fallen over -9%. This has dragged the tech-heavy Nasdaq (pink) lower by almost -2% and kept the S&P 500 (blue) in negative territory as well. But wait, the Dow Jones Industrial Average (green), with its paltry 17% technology weighting, was up almost 2% and dividend-paying stocks (purple) were up much more.
So, it isn’t all bad news. We can clearly see that some of the money leaving chips and AI stocks rotated to other sectors, finding attractive opportunities away from tech stocks. All in all, it’s a healthy thing for the markets.
There may not be a Friday email next week as I will be attending meetings at CFP Board headquarters in Washington DC on Thursday and Friday.
Have a great weekend.
Jack C. Harmon II, CFP®, CIMA
Principal, Harmon Financial Advisors
Registered Principal, Raymond James Financial Services
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