Private Client Group

October 7th, 2024

Port Strike Impact On Prices, PCE Shows Inflation Near Target, Job Market Still Healthy

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In today’s Steady Investor, we highlight some key events and market forces that are shaping the financial landscape, including:

Could the Port Strike Send Prices Soaring Again? The International Longshoremen’s Association, which has 50,000 members and operates ports across the East Coast and Gulf Coast, went on strike Tuesday. To help understand the potential scale of this move, about 60% of containerized trade moves through these ports, and S&P Global Market Intelligence estimates that some $588 billion worth of cargo was unloaded last year. By some estimates, a prolonged strike could cost the U.S. economy about $4 billion a day, but much if not all of this loss would be recovered once the strike lifts. Readers may see headlines like this one and have not-so-fond memories of supply shortages related to the pandemic, while also wondering if prices could head higher. But there’s some solace for now—most retailers are already ready for the busy fall shopping season, as they imported products earlier than typical this year. Others could divert cargo to West Coast ports, where a labor agreement was already reached last year. Analysts say that even if the strike goes on for a few days or even a couple of weeks, consumers may not notice product shortages unless delays are prolonged much longer than that. As for markets, strikes and labor disruptions tend to be short-lived, which arguably means the hit to profits may not ultimately be very substantial.1

Essential Strategies for Navigating Stock Market Volatility

Market fluctuations can make investors uneasy, but waiting for stability could lead to missed opportunities. Volatility can offer unexpected advantages; it’s just important to recognize how to leverage it.

To get more insights, all readers have access to our guide, “Using Market Volatility to Your Advantage”, which offers our expert viewpoint on navigating a volatile market, including:

If you have $500,000+ to invest and want deeper insights into how volatile markets can offer potential benefits for strong returns, download our free Using Market Volatility to Your Advantage2 guide today.

The Fed’s Preferred Inflation Gauge Falls Very Close to Target – The consumer price index (CPI) measure of inflation tends to get the most coverage in financial media, but that’s not the gauge the Federal Reserve watches the most closely. The Fed prefers the personal consumption expenditures (PCE) price index, which provides less weighting to the shelter (housing) cost component of the index. By this measure, inflation is now well within reach of the Fed’s 2% target. According to the latest PCE price index reading, inflation rose 0.1% in August from July, notching a 2.2% year-over-year increase (see chart below). This is the lowest annual rate of inflation since February 2021. Core inflation, which strips out volatile food and energy categories, was up 2.7% from a year ago, which is also a welcomed data point for the Fed. It was also reported that personal income and spending both increased 0.2% month over month.3

The Fed’s Preferred Inflation Gauge is Close to the Target 2%

Source: Federal Reserve Bank of St. Louis4

Private Payroll Data Show a Still-Healthy Jobs Market – The payrolls processing firm ADP releases a private, competing version of the jobs report as compared to the one produced by the Bureau of Labor Statistics. The two reports often diverge in monthly job gains/losses but not necessarily in where the labor market is trending. ADP’s September report shows the jobs market is still holding up – according to the report, companies added 143,000 new jobs in September, which marked an acceleration from the 103,000 in gains for August and was also about 15,000 jobs higher than consensus estimates. As far as wages are concerned, the 12-month gain for those staying in their jobs was +4.7%, and it was +6.6% for job switchers.5

Finding Silver Linings in a Volatile Market – Spotting hidden opportunities in a dynamic market can unlock valuable advantages for savvy investors.

For insights on how a volatile market can assist investors in refining their strategies and potentially achieving solid returns over time, we encourage you to explore our guide, Using Market Volatility to Your Advantage.6

If you have $500,000 or more to invest, download this free guide today by clicking the link below.

Disclosure

1 Wall Street Journal. October 1, 2024. https://www.wsj.com/articles/dockworkers-launch-strike-at-ports-from-maine-to-texas-dbbeec39?mod=djem10point

2 Zacks Investment Management reserves the right to amend the terms or rescind the Volatility can be a good thing guide offer at any time and for any reason at its discretion.

3 CNBC. September 24, 2024. https://www.cnbc.com/2024/09/27/pce-inflation-august-2024.html

4 Fred Economic Data. 2024.

5 Wall Street Journal. October 2, 2024. https://www.cnbc.com/2024/10/02/private-payrolls-show-better-than-expected-growth-of-143000-in-september-adp-says.html

6 Zacks Investment Management reserves the right to amend the terms or rescind the Volatility can be a good thing guide offer at any time and for any reason at its discretion.

DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.
Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.
This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.
Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.
Certain economic and market information contained herein has been obtained from published sources prepared by other parties. Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable. Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.
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