Why services inflation is so darn sticky

Marketplace All-in-One

Marketplace

News, Business

4.5 • 1.4K Ratings

🗓️ 27 October 2023

⏱️ 9 minutes

🔗️ Recording | iTunes | RSS

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Summary

The Federal Reserve’s interest rate hikes have forced plenty of consumers to put off bigger purchases, such as a new appliance. But people are still spending lots on cheaper, everyday services — like a haircut or dining out. That, coupled with wage increases, have caused services inflation to remain elevated. Plus, thousands of hotel workers strike in downtown in LA and October can be a spooky month for stocks.

Transcript

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0:00.0	When the stock market says, boo, I'm David Brankhacho, October can be a spooky month for
0:07.3	stocks.
0:08.3	Investors got a fright yesterday when the tech heavy NASDAQ index fell 1.8% to its lowest
0:13.5	point since May.
0:14.9	The S&P fell 1.2% futures prices on those indexes suggest to move back up when trading
0:21.3	begins today.
0:23.2	What's going on here?
0:24.2	Marketplace's Nova Sofo is here.
0:26.6	Well in short, David, it's earning season, and this one has so far offered mixed messages.
0:31.4	We've heard from about half of S&P 500 companies, but the most important are the biggest tech
0:36.4	stocks.
0:37.4	They have a huge effect on the direction that broader indexes move, and that effect in
0:41.7	large part explains the sea sawing we're seeing.
0:44.3	On Wall Street, these giant companies are known as the Magnificent 7, five of them have
0:48.0	now reported, Microsoft, Alphabet, Meta, Tesla, and Amazon.
0:52.8	And what have we heard?
0:53.8	Well Microsoft had a stellar report, but broadly speaking, it's been kind of good news about
0:58.7	the last quarter and uncertain to you about what's to come.
1:01.5	A lot of other companies have offered a similar message and have tended to revise their earnings
1:06.4	forecasts downwards.
1:08.3	Downward, but we covered the news.
1:10.6	The economy grew at a better than expected 4.9% rate in the summer.
	...

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