Stocks Surge Despite Fear of Inflation as Investors Eye Fed’s Next Move

Meanwhile, gold reaches record highs and Meta’s unbelievable rally continues

• Investors are searching the Fed minutes for clues on policy as stocks rally despite concern over inflation.
• Meta Platforms’ 17-day winning streak highlights the market’s unusual momentum and potential profit-taking opportunities.
• Gold’s record highs signal fear of inflation, while unpredictable policy announcements add to the market’s uncertainty.

Stocks had their best session of the week yesterday, with major indices posting solid gains. The S&P 500, Dow Jones Industrial Average and Russell 2000 each climbed around 1%, while the Nasdaq Composite led with a 1.5% increase. This rally occurred despite concern over inflation and tariffs.

Fear of inflation intensified after Wednesday’s consumer price index (CPI) report indicated rising prices. Yesterday’s core producer price index (PPI) report confirmed the upward trend in inflation but was not as alarming as some had feared.

Nonetheless, thes CPI and PPI reports have put inflation back at the forefront of market discussions. As a result, future economic data releases and Federal Reserve commentary will likely receive heightened scrutiny. Investors will closely watch next Wednesday’s release of the Federal Reserve’s meeting minutes, searching for insight into potential policy moves.

Adding to market uncertainty, President Trump announced plans to implement reciprocal tariffs on nations that impose tariffs on U.S. goods. While specifics remain unclear, this move appears to target India and the European Union. Details of these tariffs are expected next Tuesday, which could create additional volatility in global trade discussions.

Since the current administration took office, markets have had to adjust to policy changes often being announced via social media, sometimes without prior warning. This unpredictability has occasionally led to abrupt market shifts, particularly over weekends. Fridays could increasingly see risk-off behavior from investors looking to hedge against unexpected policy moves.

Strong quarterly reports

In earnings news, Coinbase (COIN) and DraftKings (DKNG) both reported results after yesterday’s market close.

Coinbase posted its strongest revenue quarter in three years, surpassing both top- and bottom-line expectations. While shares surged 8% on yesterday, they were set to open slightly lower in premarket trading.

DraftKings, despite missing earnings and revenue estimates, reported a 36% rise in monthly unique payers and raised its 2025 guidance. The stock rose 2% yesterday and gained another 5% in premarket trading.

Meanwhile, Applied Materials (AMAT) exceeded earnings expectations but issued weaker-than-expected guidance, causing its stock to drop nearly 10% premarket.

One of the most notable market streaks belongs to Meta Platforms (META), which has recorded gains for 17 consecutive trading sessions. Statistically, such a streak is highly improbable, making it an opportune moment for investors to consider taking profits or protecting gains.

The immediate future

Looking ahead, gold’s record highs amid a strong market suggest lingering concern over inflation. With a three-day weekend approaching, late-session selling could emerge as investors brace for potential weekend policy announcements.

As always, maintaining a long-term investing strategy remains key.

JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan

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