Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Inflationary pressures continue to mount, reemerging as the top concern among economists and market watchers, who place the blame squarely on President Donald Trump’s trade and tariff policies. Inflationary Risks ‘Are Rising’ On Tuesday, The Kobeissi Letter warned in a post on X that “Inflation risks are rising,” noting that “72% of CPI components are now surging faster than the Fed's 2% target,” which it ...

Market Overview - The market experienced a decline following Fed Chair Jerome Powell's speech, which highlighted market uncertainty and stagflation [1] - Major indices closed lower, with the S&P 500 and Nasdaq both down 0.3%, the Dow Jones Industrial Average down 0.4%, and the Russell 2000 down 0.9% after reaching a 52-week high [2] Sector Performance - The oil and energy sectors emerged as the best performers, with the Energy Select Sector SPDR Fund (XLE) gaining 1.3% [2][7] - Gold prices dipped 1.5% after a rally, although analysts expect prices to continue climbing [3] Consumer Spending and Economic Indicators - A Bank of America report indicated that total debit and credit card spending per household has increased in recent months [4][7] - There was a reported surge in new house sales, but economists dismissed it as a fluke [4] Notable Stock Movements - Lithium Americas (LAC) saw a stock increase of 95.5%, while Tesla gained 4% due to analyst confidence [4] - uniQure, a gene therapy company, experienced a significant stock surge of 247.8% following positive results from its AMT-130 study for Huntington's disease [10] Noteworthy Stocks - Stocks with notable gains included Xcel Energy Inc (+6.7%), Intel Corp (+6.4%), Centene Corp (+5.8%), Mosaic Co (+4.3%), and CF Industries Holdings Inc (+5.7%) [8] - Conversely, the worst-performing stocks included Freeport-McMoRan Inc (-16.9%), Axon Enterprise Inc (-10.2%), and KKR & Co Inc (-6.3%) [12]

Economic Overview - Recent economic reports indicate a challenging trajectory for the U.S. economy, with concerns about slowing growth and rising inflation [1][2] - The August jobs report showed only 22,000 jobs added, significantly below the expected 75,000, raising fears of an economic slowdown [2] - Jobless claims reached their highest level since October 2021, further contributing to concerns about economic performance [2] - The Consumer Price Index increased by 0.4% in August, marking the largest year-over-year jump since January, indicating rising inflation [2] Stagflation Concerns - Analysts are increasingly worried about the potential for stagflation, characterized by slow growth, high inflation, and unemployment [3] - The combination of poor job growth and rising inflation has led to heightened discussions about the risks of stagflation in the current economic climate [3] Investment Strategies - In response to potential stagflation, investors are advised to consider equity alternatives with a focus on risk management, such as the Calamos Laddered S&P 500 Structured Alt Protection ETF (CPSL) [4] - CPSL aims for steady capital appreciation by investing in a laddered portfolio of structured protection ETFs, providing capped exposure to the S&P 500 [4][6] - The underlying ETFs within CPSL offer complete downside protection across their one-year outcome periods, which could be crucial if stagflation occurs [5] - CPSL's strategy allows investors to remain engaged with the large-cap market while protecting principal investments from stagflation pressures [6]

Market Overview - Stock prices experienced a decline, with the S&P 500 index falling by 0.6%, the Nasdaq Composite decreasing nearly 1%, and the Dow Jones Industrial Average dropping by 0.2% [3] - The decline in stock prices followed a period of record highs earlier in the week, influenced by Fed Chair Jerome Powell's cautious stance on interest rate reductions [4] Federal Reserve Insights - Jerome Powell expressed concerns regarding persistent inflation and a slowing labor market, describing the current economic situation as "challenging" [4] - Investors are anticipating a potential second interest rate reduction in 2025 during the Fed's October meeting, although Powell did not confirm this expectation [4] Economic Indicators - Upcoming economic reports include new residential housing sales for August, with analysts predicting a slight dip to 650,000 from July's 652,000 [6] - Cintas Corporation is expected to report an EPS of $1.20 for the August quarter, an increase from $1.10 in the prior year [6] - Uranium Energy is projected to report a loss per share of $0.04 for the July quarter, compared to a $0.03 loss in the previous year [6] - KB Home aims to exceed a consensus EPS estimate of $1.51 for the August quarter, down from $2.04 in the prior year [6]

Market Overview - The Federal Reserve Chair acknowledged that equity prices are highly valued, indicating stretched valuations in the market [1][3] - Major indexes had reached all-time highs before a recent pullback, with the NASDAQ rallying 47% since April lows [2][3] Economic Indicators - The focus remains on the labor market, with expectations for two additional rate cuts by the end of the year [4] - There is a possibility of a near-term market correction due to a weaker-than-expected labor report or high expectations for the upcoming earnings season [5][6] Artificial Intelligence Investment - The total addressable market for AI is currently estimated at $450 billion and is expected to double in the coming years, indicating significant infrastructure and software development opportunities [8] - Companies are investing heavily in AI, with a focus on both cutting-edge AI firms and integrating AI into existing portfolio companies, potentially creating $1.5 billion in enterprise value [9][10] Characteristics of Beneficiary Companies - Companies that benefit from AI typically possess proprietary data sets and the ability to automate business processes [11][12] - There is a distinction between companies that will benefit from AI advancements and those that may be disrupted by them [11] Labor Market Concerns - There are concerns regarding the labor market, particularly if companies begin to tighten budgets, which could lead to job layoffs and decreased consumer confidence [14][15] - The potential for a stagflation scenario exists if inflation rises alongside labor market issues, although current service inflation remains stable at 2.5% year-over-year [16][17] Earnings Season Outlook - The upcoming earnings season has a high bar set for performance, with more companies issuing positive guidance compared to historical averages [18]

Market Performance - The S&P 500 and DJIA reached new 52-week highs but closed lower by 0.6% and 0.2% respectively, while the Nasdaq fell by 0.9% [2] - The Russell 2000 also hit a 52-week high at $2488.84 but ended the day down 0.2% [2] - Major tech stocks like Nvidia and Amazon saw significant declines, with Nvidia down 2.8% and Amazon down 3% [2][8] Sector Performance - The energy sector performed well, driven by rising oil and gas prices, with Halliburton being a top performer, up 7.3% [3][9] - BigBear.ai holdings also showed strong performance, increasing by 12.8% [3] Economic Indicators - Fed Chair Jerome Powell indicated slow job growth and rising inflation, suggesting unstable economic conditions [4] - The unemployment rate has edged up, job gains have slowed, and inflation remains elevated, indicating potential stagflation [5][8] Notable Stock Movements - Generac Holdings Inc was the worst performer, down 10.3% [7] - Other notable declines included Vistra Corp at -6.3%, Synopsys Inc at -4.8%, and Oracle Corp at -4.4% [12] - Intel saw a slight increase of 2% amidst concerns regarding Nvidia's investments [12]

Core Insights - Micron reported earnings that exceeded expectations on both the top and bottom lines, along with better-than-expected guidance [2] - Federal Reserve Chair Jerome Powell expressed concerns about a softening labor market, indicating a stagflationary environment, and suggested that equities may be overvalued [2][3] - Amazon is engaged in a legal battle against the FTC over allegations of misleading practices related to its Prime membership [3][4] Economic Indicators - The Russell 2000 index reached a fresh high, suggesting a potential reacceleration of economic growth in the U.S. that could benefit small-cap stocks [6] - U.S. flash PMI data indicated continued expansion but was weaker than expected, with slower hiring and tariffs contributing to higher costs and limited pricing power [6] - A busy week of economic data is anticipated, including PCE, consumer sentiment, jobless claims, new and existing home sales, and GDP numbers, which will provide insights into consumer behavior and inflation [7][8] Federal Reserve Outlook - The Federal Reserve is experiencing divisions among its members regarding future monetary policy, with upcoming speeches from Fed officials expected to clarify their positions [9][10] - Mary Daly's remarks on the U.S. economy will be closely watched, particularly her views on inflation and the labor market [10][11] - Mortgage applications surged by 29.7% week-over-week, driven by refinancing activity as the 30-year fixed mortgage rate declined to 6.39% [12][13]

Core Insights - Trading options can be highly profitable but carries significant risks, particularly in derivatives where losses can exceed the principal amount [1] - Risk management frameworks, such as catastrophe modeling, can be applied to assess unusual variances in equities [2] Company Analysis: Toast Inc (TOST) - TOST stock has shown strong performance over the past year with a gain of nearly 41%, but has recently experienced a decline of approximately 12% in the last month [3] - On a recent trading day, TOST stock was among the biggest losers, dropping over 5% and appearing on Barchart's Unusual Stock Options Volume list with 65,789 contracts traded, a 191.41% increase compared to the previous month [4] - Despite the high volume of call options (45,657 contracts), the net trade sentiment indicated a bearish outlook, with a net trade sentiment of $727,800 below parity [5] - Since August 1, TOST stock has decreased by 21%, prompting professional investors to exit their positions, which may present a potential opportunity for contrarian investors [5] Economic Context - Experts have raised concerns about the U.S. economy potentially entering stagflation, characterized by a weakening labor market and persistent inflation, which adds to the speculative nature of investing in TOST stock [6]

Core Viewpoint - The Federal Reserve is responding to a weakening labor market by lowering interest rates, prioritizing employment concerns over inflation risks [1][2][4]. Group 1: Labor Market and Employment - The Federal Reserve's decision to cut interest rates is influenced by signs of waning supply and demand for workers, indicating a weakening labor market [2]. - Jerome Powell highlighted increased downside risks to employment, suggesting a shift in the balance of risks towards achieving employment goals [4]. Group 2: Inflation and Economic Conditions - Near-term inflation risks are tilted to the upside, while employment risks are tilted to the downside, creating a challenging economic environment [3]. - The current economic conditions resemble stagflation, characterized by slow growth and high inflation, although not as severe as the stagflation experienced in the 1970s and early 1980s [3]. Group 3: Federal Reserve Policy - Powell expressed comfort with the current policy path of the Federal Reserve, indicating that further cuts could be considered if necessary to support the economy [4]. - The Fed's policy stance is described as modestly restrictive, positioning it to respond to potential economic developments [4].

Economic Context - Current economic conditions are characterized as "stagflation-lite," indicating slowing growth alongside inflation, although unemployment remains relatively stable [1] - The impact of tariffs on prices has not fully materialized and may be temporary [1] Defensive Investment Opportunities - Two small-cap food companies are highlighted as defensive plays that are likely to withstand the stagflation environment due to the non-discretionary nature of food products [2] Village Super Market, Inc. (VLGEA) - Operates 34 supermarkets under ShopRite and Fairway brands across several states and is the second-largest member of Wakefern Food Corporation [3] - The company is investing $75 million in capital expenditures for fiscal 2025 to upgrade and expand its supermarket chain, including new store constructions [4] - For the fiscal third quarter, VLGEA reported earnings per share of 75 cents, up from 60 cents a year earlier, with sales increasing 3.2% year over year to $563.7 million [5] - Net income rose 24% to $11.2 million, with adjusted net income increasing 21% to $11.6 million [5] - The stock is trading at 0.19X trailing 12-month EV/sales, significantly lower than the Zacks sub-industry average of 1.15X [6] - The stock's trailing 12-month EV/EBITDA is 4.08X, compared to 18.37X for the Zacks sub-industry [7] Armanino Foods of Distinction, Inc. (AMNF) - Engaged in producing and marketing upscale frozen and refrigerated food products, including pesto sauces and stuffed pasta [8] - For the second quarter ended June 30, 2025, AMNF reported net sales of $19.97 million, a 14% increase from the previous year, with gross profit rising 26% to $9.11 million [9] - Net income climbed 27% to $4.85 million, resulting in earnings per share of 15.44 cents, a 30% increase from 11.86 cents a year earlier [9] - The company has $4.65 million authorized for future buybacks and offers a dividend yield of 1.6% [10] - The stock is trading at 3.81X trailing 12-month EV/sales, higher than the Zacks sub-industry average of 1.57X [10] - The trailing 12-month EV/EBITDA for AMNF is 12.45X, comparable to the Zacks sub-industry average of 12.19X [11] - Both companies are characterized as "steady eddies" with moderate ongoing appreciation potential and currently hold a Zacks Outperform rating [11]