Too Busy Buying the Dip to Fret Over Inflation

If traders wanted to book profits after two days of robust gains, this morning's higher-than-expected consumer price index report provided a ready excuse.

However, early weakness had given way to renewed strength, reflecting the observation of one source that "the tone has changed from a 'sell the rallies' market to a 'buy the dips' market."

The CPI rose 0.5% in April vs. expectations for a 0.4% gain as gasoline prices notched their biggest increase since June 2000. Core CPI, which excludes food and energy, rose 0.3%, also slightly ahead of expectations. On a year-over-year basis, the overall CPI has risen 1.6% vs. its low of 1.1% in February, while core CPI is up 2.5%, within the range of 2.4% to 2.8% intact for two years. ...