It's going Dow... and Wall Street yelled "timber" (thanks, Ke$ha). The industrials-heavy Dow index fell 1.4% yesterday, after closing last week at a record high. On Monday, the techy Nasdaq plunged 2.5%, dragging the whole market down. What's going on:
The entire drive-thru just got pricier... including the car. Supply chain and labor shortages are driving up prices of raw materials and consumer goods. Meanwhile, the Fed has added trillions to the money supply through stimulus packages and bond-buying sprees, adding to concerns. Some areas seeing notable spikes:
Everyone's asking: temporary or trend?... Is this a one-time price increase as the economy rebounds — or, the start of higher yearly inflation? Economists expect these rising costs are temporary. But if they become a trend, that could push the Fed to hike interest rates. Higher rates can make bonds and savings accounts more attractive than riskier assets (like stocks). They also increase the cost of borrowing, which can dampen growth. So far, the Fed has stayed committed to its low-rate policy. But investors worry rising prices could change that.