STOCK INDEXES MAINTAIN UPTRENDS -- MATERIALS ARE WEEK'S STRONGEST SECTOR -- BOND YIELDS RISE ON INFLATION REPORT -- SO DOES GOLD

STOCK INDEXES MAINTAIN UPTRENDS... Stocks are ending the week trying to make up some losses from Wednesday's sharp selloff after the CPI annual inflation report of 6.2% was the highest level in thirty years.  Chart 1 shows the Dow Industrial staying above its 20-day moving average.  Charts 2 and 3 show the S&P 500 and Nasdaq 100 doing the same.   All three indexes are down for the week.    So far, however, those losses haven't been enough to reverse the market's continuing uptrend.   Most sectors also lost ground on the week  with four exceptions.   Materials, healthcare, industrials, and technology ended the week in the black.  Let's take a closer look at materials.

CHEMICALS LEAD MATERIALS HIGHER...Chart 4 shows the Materials Sector SPDR (XLB) ending the week in record territory.  It was the only sector to do that.   Copper and aluminum stocks contributed to its gains.   Chemical stocks, however,  were the sector's standout performers.   Chart 5 shows the Dow Jones Specialty Chemicals Index  ending in record territory; while Chart 6 shows Dow Jones Commodity Chemicals Index close to doing the same.

TREASURY YIELDS AND GOLD CLIMB ON INFLATION REPORT...Bond yields rose sharply this week following the strong inflation report.   Chart 7 shows the 10-Year Treasury yield rising 12 basis points during the week to end at 1.58%.  Interest rates usually follow inflation higher.   Gold had a strong week as well.   Chart 8 shows the Gold Shares SPDR (GLD) rising to the highest level in five months.  Long viewed as an inflation hedge, gold has remained relative flat over the past few months as inflation pressures were growing stronger.   This past week's gains in the yellow metal suggest that gold may finally be returning to its traditional role as a hedge against rising inflation.