Here's Why It Makes Sense To Bet On Dividend Aristocrat ETFs

Money, Profit, Finance, Business, Return, Yield

Wall Street had a tough time this week as inflation fears continued to tighten grip on the market. The Dow Jones Industrial Average has declined about 0.9% in the week and is heading toward the fourth negative week in the past five. Going on, the S&P 500 is also down 0.4% and on track to see a second negative week consecutively.

Investors have become increasingly worried since the latest data highlighted inflation levels rising at the fastest speed since 2008 in April. Notably, the Consumer Price Index rose 4.2% year over year in comparison with the Dow Jones estimate of a 3.6% rise, per a CNBC article. The five-year breakeven inflation rate — which measures expectations of inflation five years out — reached its highest since April 2011 on May 10 while the 10-year breakeven inflation rate — a measure of expectations of inflation in 10 years’ time — rose to its highest since March 2013.

Notably, market participants are apprehending that rising inflation may hurt corporate margins and profits. They also fear that the consistent rise in inflation may build pressure on the Federal Reserve to tighten the monetary policy, according to a CNBC article.

Moreover, retail sales in the United States were unchanged in April 2021, falling shy of market expectations of a 1% increase. This follows an upwardly revised 10.7% uptick in March when most households received the first round of stimulus checks.

It is also worth noting here that the rising concerns about the U.S. inflation levels have hurt U.S. consumer sentiments as well. Notably, the University of Michigan’s preliminary consumer sentiment index declined to 82.8 in May from 88.3 last month. The reading lagged even the most pessimistic forecast, per a Bloomberg survey. Consumers seem to be worried about a spike in gas, home and auto prices, per a Bloomberg article.

The measure of current conditions declined to 90.8 in May. Meanwhile, a gauge of consumer expectations fell more than 5 points to 77.6 in early May. Moving on, one-year inflation expectation climbed to 4.6% (the highest reading in a decade). Meanwhile, 43% of the survey participants have responded saying that prices may rise by at least 5%, per the same article.

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