Wall Street is up roughly 25% so far this year

Stock prices aren’t the only rising prices. Inflation remains the most prevalent risk to Wall Street’s as-yet astounding bull run, with rising consumer prices stemming from supply-chain disruptions stunting GDP growth, while also requiring a less accommodative Fed.

While inflation has chances of being the stickiest the U.S. has experienced over the last 20 years, it’s reasonable to assume that some relief is on the way with Fed interventions.

On one hand, rising wages and further upward pressure coming from the housing component of the Consumer Price Index (CPI) basket will, in all likelihood, prevent inflation from falling to pre-pandemic levels. However, we believe supply bottlenecks will begin to clear later in 2022, allowing inflation pressures to ease.

Wall Street’s bull may have been rattled by surging inflation lately, but it isn’t running scared. It is possible that higher inflation could dampen investor confidence and if the inflation numbers may not seem transitory, however, there seem to be no clear signs of rising inflation impacting stock markets from the historical data.

Stocks ended the week mixed after shares of energy companies and airlines fell but tech stocks rallied. The Nasdaq ended the week higher, the Dow Jones finished the week lower, and the S&P 500 closed marginally above break-even.

For the week, the S&P 500 notched 0.3% higher, led by stellar earnings reports from big retailers and strong U.S. retail data. The blue-chip Dow fell 1.3% for the week, while the tech-heavy Nasdaq Composite got a 1.2% boost.