Why Inflation Scares Haven’t Hammered the Stock Market

Oct 24, 2021

Why Inflation Scares Haven't Hammered the Stock Market

Despite the constant fear of inflation, the Dow Jones Industrial Average (DJI) and S&P 500 (GSPC) are flirting with new highs.

Isn't that the opposite of dominant narrative?

On paper, rising inflationary pressure, largely due to the epidemic, should be squeezing corporate profit margins and dragging on market expectations. So far this earnings season, that hasn't happened on balance, and stock prices have jumped on the less grim story quickly, according to experts.

"Investor mood had deteriorated significantly in the run-up to earnings season. However, we're seeing corporations provide strong earnings once again "NYSE senior market analyst Michael Reinking points out.

The data reveals that Reinking is right.

In the third quarter, almost 84 percent of corporations outperformed profit projections, matching the record levels set in the previous two quarters. Earnings have increased by 32.7 percent for those companies that have reported. Companies have been able to achieve great outcomes by combining price rises and cost reduction to counteract anything other than temporary inflation.

Meanwhile, according to Goldman Sachs, 65 percent of the 117 S&P 500 businesses that have reported profits thus far have outperformed consensus predictions by at least one standard deviation. This is a pace that, if maintained, would place the first and second quarters of 2021 among the strongest on record.

According to David Kostin, Goldman Sachs' top U.S. stock strategist, the percentage of businesses reporting above-consensus sales has also been above the historical norm.

Kostin continues, "Markets have moved along with modest signals of recovery from supply chain data and commodity prices, although management and analysts remain cautious."

Inflationary forces, on the other hand, are not amusing right now.

This year, Whirlpool CEO Marc Bizter told Yahoo Finance Live that his firm will take a $1 billion blow from inflation. He continues to retaliate by raising consumer costs.

"Different people have different ideas about what it means to be transitory. These days, I'm not sure how long you'd consider transitory. I mean, the fundamental question is whether we'll see expected cyclical inflation or whether we'll see structural inflation. Personally, I don't believe it's the latter. But, given the current inflationary atmosphere, I believe we will continue to see around us for some time. We're prepared to deal with the fact that it won't go away overnight, "Bitzer elaborated.

P&G Vice Chairman Jon Moeller stated on Yahoo Finance Live that inflation will cost the Tide manufacturer $2.2 billion in after-tax earnings this fiscal year. To safeguard margins, Moeller is also boosting prices on customers.

Even people like Jack Dorsey, the CEO of Twitter and Square, are already warning of hyperinflation.

Even if it isn't reflected in the larger market, investors are starting to take attention.

"Over the coming week, markets will be keenly focused on inflation, with investor predictions of future inflation rising to new multi-year highs in recent days." Jim Reid, a strategist at Deutsche Bank, says.

In the short term, though, market bulls appear to be in command.

Quips Reinking, "It appears that investors are becoming numb to these difficulties and are prepared to look past them, as we've seen many instances when equities gapped down on a forecast miss only to bounce later in the session."

Subscribe Our Newsletter

Europe's Gas Crunch Shows Little Sign of Easing
Europe’s Gas Crunch Shows Little Sign of Easing

This winter, consumers in the European Union and the United Kingdom may face even higher gas prices as Russian gas flows via main transit routes prove to be too little, too late.

Banks and Finance
Stock Market News Live Updates: Stocks Erase Earlier Gains To End Lower
Stock Market News Live Updates: Stocks Erase Earlier Gains To End Lower

Stocks fell to end a rocky day at the beginning of another busy week for quarterly results and new economic numbers as investors try to examine the Fed's monetary policy route ahead.

Stocks
Get the ultimate solution: B2BinPay Get the ultimate solution: B2BinPay
Sponsored
Constantine

Crypto Liquidity — What is it, and How to Measure It?
Learn how crypto liquidity is measured, key metrics, and tools to analyze it, ensuring efficient trading and stable market conditions.

discover
How to Create a Cryptocurrency

Tamta

How to Create a Cryptocurrency

As the world grows more digital, the desire for new and innovative technology has increased dramatically.

Fintech
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Alex

    Top 10 Fintech Website Development Agencies for 2025

    Best Fintech Website Development Agencies for 2025

    Сonstantine

    Internal vs External Range Liquidity In ICT Trading Explained

    Internal vs External Range Liquidity In ICT Trading

    Constantine

    Portfolio Backtesting — Tools, Metrics, and Methods Explained

    Portfolio Backtesting

    Сonstantine

    ICT Trading Explained: Smart Money Concepts, Tools and Setups

    ICT Trading Explained

    Сonstantine

    CFD Trading Strategies: A Practical Guide to Risk and Execution

    CFD Trading Strategies

    Alexander

    What is a Fair Value Gap? A Guide to Trading Market Imbalances

    What is Fair Value Gap

    Vitaliy

    Triangle Patterns in Trading: Mastering Ascending, Descending & Symmetrical Strategies for Maximum Profit

    Triangle Patterns in Trading: Ascending, Descending & Symmetrical Guide

    Alexander

    What Is COTI? Payments, Token & Price Prediction

    What is a COTI coin

    Constantine

    Best Copy Trading Software in 2025

    Best Copy Trading Software in 2025

    Alex

    What Is an AI Agent? The Future of Finance Explained

    AI Agent Explained

    Constantine

    How to Start a Liquidity Provider Business?

    How to Start a Liquidity Provider Business

    Constantine

    How to Start a White Label Brokerage?

    How to start a white label brokerage

    Constantine

    How to Start a Multi-Asset Brokerage?

    How to Start a Multi-Asset Brokerage

    Hazem

    Crypto Ransomware – How They Happen and How to Avoid Them

    Crypto ransomware explained

    Constantine

    Best Web3 Browsers in 2025

    Best Web3 Browsers

    Constantine

    Best DAO Projects in 2025

    Best DAO projects in 2025

    Alexander

    Crypto Nodes That Pay: Your 2025 Guide to Top Passive Income Opportunities in Crypto

    crypto nodes that pay

    Alex

    Pi Network: Scam or Groundbreaking Crypto? The Full Analysis

    Pi Network Explained

    Constantine

    Triple Net Lease: Meaning, Benefits, and Strategies Explained

    Triple Net Lease

    Constantine

    Hanging Man Pattern: How to Identify and Trade It Effectively

    Hanging Man Pattern

    Alex

    5 Infinite Banking Mistakes That Could Cost You Thousands

    Infinite Banking Mistakes to Avoid

    Aleksander

    Solana Firedancer: Solving Solana’s Biggest Problems with a New Engine

    Solana Firedancer explained

    Alexander

    What Is an Interest Coverage Ratio? How to Use This Financial Metric to Evaluate Company Health

    Interest Coverage Ratio Explained

    Hazem

    After-Hours Trading: Can You Trade After Financial Markets Close?

    After-Hours Trading Explained
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.