Seeking Alpha Keeps Buy on SPY as Core Inflation Hits 3.8%

Seeking Alpha maintained a ‘Buy’ rating on the SPDR S&P 500 ETF Trust (SPY) after April core consumer prices rose 3.8% year-over-year. The inflation data were released May 10, and SPY shares gained about 1.2% in after-hours trading following the report.

Core inflation, which excludes food and energy, was 3.8% year-over-year in April, above the 3.5% forecast. Overall energy costs increased roughly 5% and services prices rose about 4% for the month.

Seeking Alpha cited historical performance showing SPY delivered an average annual return near 8% since 2010 under comparable inflation conditions and used that record in support of keeping a Buy rating on the ETF.

Market reaction included gains in equities and cryptocurrencies. Bitcoin rose roughly 12% over the past month and its market capitalization climbed by about $150 billion. Some research indicates institutional investors could shift 15% to 20% of holdings from equities such as SPY into digital assets if inflation remains above 3% for a sustained period.

Inflation readings are one input the Federal Open Market Committee reviews when setting interest-rate policy. Higher readings tend to raise interest-rate expectations and can increase volatility across asset classes by changing the discount applied to future earnings.

SPY tracks the S&P 500 index and is widely used by institutional and retail investors. Analysts note that diversified exposure to large-cap U.S. companies has helped the ETF recover from prior inflation-driven selloffs.

Investors and policymakers will monitor upcoming inflation reports and Federal Reserve communications. Strategists cite portfolio allocations, interest-rate expectations and market liquidity as factors likely to influence market performance in the coming months.