Stock Market Today: Stocks Finish Lower After Inflation Data, Fed Minutes

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Wednesday's choppy trading ended with a loss for stocks. Modest declines for the Nasdaq Composite (-0.1% at 10,417) and the S&P 500 Index (-0.3% at 3,577) had the two indexes extending their losing streaks to six days, while the Dow Jones Industrial Average shed 0.1% to 29,210.

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In focus today was September's producer price index (PPI), which showed wholesale inflation rose at a faster-than-expected pace last month. Meanwhile, core PPI, which excludes volatile food and energy prices, posted its largest month-over-month increase since May.

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The inflation data came ahead of this afternoon's release of the minutes from the Federal Open Market Committee's (FOMC) September meeting, when the central bank issued its third consecutive 75 basis-point rate hike (a basis point = 0.01%). The minutes showed red-hot inflation is still top of mind for the Fed, and confirmed that the central bank "needed to move to, and then maintain, a more restrictive policy stance" in order to ease price pressures.

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Today's PPI report makes tomorrow's release of the consumer price index (CPI) all that more critical, especially as the Federal Reserve continues to be concerned about stubbornly high inflation. "No doubt the Fed still has its work cut out for them, and if tomorrow's CPI read is hot, don’t be surprised to see some investors come to grips with how long the road to tamer inflation may be," says Mike Loewengart, head of portfolio construction at Morgan Stanley Global Investment Office.

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We've talked in this space many times about how investors can protect their portfolios against potential volatility in the market, including with dividend stocks. But not all dividend payers are created equal. "Too often people are drawn to the allure of a high yield, not realizing the company doesn't have the financial strength to pay the same level of dividend into the future," says Austin Graff, co-chief investment officer and portfolio manager of the TrueShares Low Volatility Equity Income ETF (DIVZ). "Combine that with the fact that we have entered a new paradigm in the market, from extremely easy money policy to tighter monetary policy, the dividend yields of companies that rely on heavy debt loads become suspect."

As such, it's important for investors to focus on high-quality dividend stocks, which can often be found in companies consistently growing their payouts. The obvious place to start is with the Dividend Aristocrats, an elite group of S&P 500 stocks that have raised their dividends for 25 straight years. There are also the Dividend Kings – the crème de la crème of dividend growers that have hiked their payouts for at least 50 consecutive years. Check them out.

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With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at a local investment research firm. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.