Investors might have thought that the stock market would do poorly after Friday morning’s announcement from the Bureau of Labor Statistics that consumer inflation levels had reached multi-decade highs.
The Consumer Price Index rose 0.8% in November, marking the fourth time in the past eight months that the CPI had risen that much or more in a single month.
Some other items that have seen stubborn high price increases stayed near the top of the list, with new vehicle prices picking up 1.1%, used car prices climbing 2.5%, and apparel seeing 1.3% price gains .
Similarly, companies that have to bear higher input costs themselves see profits suffer, but those that can pass on higher costs to consumers can avoid or at least reduce the hit to their earnings.
For instance, Costco Wholesale saw its stock rise nearly 7% on Friday.
Comparable sales were up 15% from year-earlier levels, and while a significant portion of those gains were due to higher gasoline prices, Costco still saw a nearly 10% rise in comps after accounting for gasoline and foreign exchange effects.
Similarly, Ford Motor shares climbed almost 10%.
That vote of confidence comes amid Ford’s ongoing efforts to overcome challenges from semiconductor chip shortages to meet the huge and rising demand for cars and trucks.
Inflation hurts consumers, but it can be good for the right stocks.