Trade and PPI Weigh on Market

Wall Street continues to take the David Arquette/Courteney Cox news in stride. The Dow is currently off 20 points. Our Buy List is modestly higher.

Reynolds American (RAI) came within one penny of making a new 52-week high this morning. The stock is up over 13% for the year for us — and that doesn’t include the big dividend.

Other news impacting finance this morning is that the report on the U.S. trade gap for last month climbed higher than expected. The gap grew by 8.8% to $46.3 billion compared with Wall Street’s estimate of $44 billion. Imports rose by 2.1%, while exports increased 0.2%. Here’s a stunning fact: Trade knocked off 3.5 percentage points from Q2 GDP growth. That’s the most since 1947 and imports grew at the fastest pace since 1984.

The Labor Department said that wholesale prices rose by 0.4% last month. However, the “core rate,” which doesn’t include food and energy prices, rose by just 0.1%. As it turns out, the core reading explains a lot since food prices rose by 1.2% in September and since energy prices rose by 0.5%.

Overall, this news will give Bernanke & Co more room to operate. I think the Fed will go ahead with QE2 at their meeting in early November. I expect that the Fed will announce a program to buy, say, $300 billion to $500 billion worth of Treasuries in an attempt to get the economy moving again.

Posted by on October 14th, 2010 at 10:11 am


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