Investors rush into stocks to hedge rising inflation levels

The US stock market has started the new week with massive gains in both stock Indices. All the major US stocks have witnessed a surge in their stock prices during the Asian session today. Analysts believe that investors are gradually returning to investing in stores due to the increasing inflation rate within the country.

Thus, the US inflation data hit its highest record in the just concluded month at 9.1%. This marks its highest record in over 40 years. According to the existing records, the last time inflation reached this point was in 1981, during the protracted economic crisis.

Investors are seeking some remedy to the rising inflation rate and therefore trying to hedge against inflation by diversifying their assets into stocks.

The rise in the prices of the Indices pairs could indicate that investors are currently returning to the risk-on mode, which is when investors purchase risky assets to hedge against inflation.

The following stocks were among the top movers in the stock market during the Asian session today.

  • Apple Inc.(#AAPL) is up by 1.13%, with its price at $150
  • Netflix Inc (#NFLX) is up by 2.1%, with its price at $188.79
  • NVIDIA Corporation (#NVDA) is up by 1.3%, with its price at $157.46
  • Alcoa Corp (#AA) is up by 1.5%, with its price at $42.98
  • American Airlines Group (#AAL) is up by 1.23%, with its price at $14.46
  • Adobe Systems Incorporation (#ADBE) is up by 0.7%, with its price at $379.40
  • AMC Entertainment Holdings (#AMC) is up by 1.1%, with its price at $15.34
  • Akamai Technologies Inc (#AKAM) is up by 2.1%, with its price at $88.34
  • Alibaba Group Holding Limited (#BABA) is up by 0.6%, with its price at $102.40
  • Blackberry Ltd (#BB) is currently up by 3.1%, with its price at $5.74
  • Baidu Inc (#BIDU) is currently up by 0.8%, with its price at $139.82
  • Best Buy Co (#BBY) is currently up by 0.9%, with its price at $72.45
  • Caterpillar Inc (#CAT) is up by 0.4%, with its price at $173.12
  • Coinbase Global Inc (#Coin) is currently up by 0.8%, with its price at $53.69
  • Hilton Worldwide Holdings Inc. (#HLT) is currently up by 0.45%, with its price at $116.42
  • Microsoft Corporation (#MSFT) is currently up by 0.3%, with its price at $256.52

Nevertheless, the prices are pushing higher as more investors seem to be entering the market every minute. The stock market will likely remain volatile this week.

This optimism might be short-lived ahead of the Fed’s session next week – where the monetary policy committee will be expected to increase the interest rate. This will likely lead to a return to the risk-off mode and withdrawals from stock investments.

Regarding the index market, we saw a few from the list standing out amongst other pairs after their poor performance last week. The following Indices pairs are among the top performers during the Asian session today.

  • Dow Jones Industrial Average is up by 0.30%, with its price at $31287.20
  • S&P 500 is up by 0.26%, with its price at $3880.2
  • Nasdaq 100 is up by 0.9%, with its price at $12093.6
  • US 30 (DOW 30) is up by 0.3% with its price at $31390.6

How does inflation influence the prices of US stocks and indices?

Rising inflation in the US economy generally pushes investors to purchase risky assets, often serving as a hedge against inflation. Investors seek higher gains through large stock purchases when the inflation rate rises untamed. The only backdrop to this comes if the Fed is pushed to hike the interest rate due to increasing inflations; otherwise, the stock and index market will remain bullish.

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