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Inflation gauge favored by Fed showed prices ticked higher in February

1. PCE index rose 0.3% monthly, 2.5% annually, exceeding Fed's target. 2. Core PCE rose 0.4% monthly, slightly above initial estimates. 3. Wage growth increased to 0.4% in February, up from 0.2% in January. 4. Personal savings rate increased to 4.6%, showing rising consumer caution. 5. Prices for services grew by 1%, indicating ongoing inflation pressures.

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FAQ

Why Bearish?

Persistently high inflation rates may lead to tighter monetary policy. Historical examples show that sustained inflation typically pressures equity markets, including the S&P 500.

How important is it?

Inflation data significantly affects S&P 500 valuations and investor sentiment. Investors often adjust positions based on expected Fed responses to inflation.

Why Short Term?

Immediate responses to inflation data often affect market volatility. Investors may react quickly to signals of potential Fed rate hikes.

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