Marketbites: The Buffett Bump
Portfolio Manager Commentary:
The three major indices rose Tuesday after another report signaled that inflation could be slowing. They initially rallied after the producer price index, a measure of wholesale inflation, showed a 0.2% increase for the month of October, versus the consensus estimate for a 0.4% increase from Dow Jones. The report comes after last week’s consumer price index data showed signs of inflationary pressure abating last month, sparking a sharp rally.
The peak-inflation narrative is gaining traction, but the bar for a Fed pivot is still high, said Ross Mayfield, investment strategy analyst at Baird. “There will be trepidation at the central bank given their credibility concerns and desire to avoid the mistakes of the 1970s (i.e., stop and start policy that prolonged the inflationary spell),” he said. “But the crumbs are already being laid for a deceleration in pace of tightening heading into 2023.”
Retail stocks also lifted investors' spirits after Walmart beat earnings expectations and boosted full-year guidance. Walmart stock rose 6.5% on the day. Home Depot reported strong results too but kept guidance in place for the full-year. Home Depot shares rose a more modest 1.63%.
Chart of the Day:
Shares of several companies received a Warren Buffett bump yesterday after Berkshire Hathaway disclosed new and expanded positions in a 13F filing Monday. American depositary receipts of Taiwan Semiconductor Manufacturing, a new Berkshire investment, jumped nearly 13%. It was on pace for its biggest percentage increase since July 2020, according to Dow Jones Market Data. Louisiana-Pacific shares also had a great day with an 11% increase.
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