To The Moon

September’s US producer inflation delivered an uncomfortable surprise.

The Producer Price Index (PPI) jumped 1.3% month over month, well above the 0.6% economists expected. Annual producer inflation accelerated to 6.3%, its highest level since December 2022.

Energy was a major driver, but the pressure wasn’t limited to fuel. Services prices rose 0.8% during the month, while prices excluding food, energy and trade services increased 0.5%.

This raises a bigger question for investors: if inflation stays elevated, can money rotating out of technology stocks really find safety elsewhere?

📉 1. Why QQQ could remain under pressure

The $Invesco QQQ Trust (QQQ)$ is heavily exposed to large growth and technology companies.

When inflation rises, investors may worry that interest rates will remain higher for longer. That can reduce the present value of future earnings, putting pressure on highly valued growth stocks.

AI companies face an additional question: can the returns from expensive chips, data centres and computing infrastructure justify their enormous investment?

Even companies reporting strong earnings could face share-price pressure if valuations already assume exceptional growth.

🏦 2. Is SPY the safer alternative?

The $SPDR S&P 500 ETF (SPY)$ offers broader exposure across sectors, including financials, industrials, healthcare and consumer companies.

That diversification can help when technology stocks underperform.

But broader exposure doesn’t automatically mean protection against inflation.

Higher fuel and transportation costs can squeeze retailers, manufacturers and consumer-facing businesses. Banks may benefit from certain interest-rate environments, but higher borrowing costs can also weaken loan demand and increase credit risks.

The key is not simply moving from growth to value. It is understanding which businesses can maintain their margins when costs rise.

⚡ 3. The market’s reaction tells an interesting story

Despite the inflation surprise, US stocks advanced on Thursday, 15 October. The S&P 500 gained approximately 0.33%, while the Nasdaq Composite rose around 0.08%.

Treasury yields also retreated, helping ease some pressure on equities.

This suggests investors were weighing several forces at once rather than responding to inflation data alone. One day’s market movement, however, doesn’t establish a lasting trend. 

🎯 4. Three signals I would watch next

Inflation: Does the next set of data show that September’s surge was mainly an energy shock, or is price pressure spreading further?

Treasury yields: Do yields resume climbing, increasing pressure on stock valuations?

Earnings and margins: Can companies pass higher costs to customers without damaging demand?

These factors could determine whether the rotation into broader-market and value stocks continues or reverses.

💡 My takeaway

I wouldn’t automatically abandon QQQ because of one hot inflation report. Nor would I assume SPY is safe simply because it offers broader exposure.

If inflation remains elevated, both growth and value stocks could face pressure, albeit for different reasons.

The next phase of this market may reward companies with pricing power, resilient cash flow and disciplined capital spending—not just the sector attracting the latest inflows.

💬 If you had to choose today, would you continue holding QQQ for long-term growth, shift toward SPY for broader diversification, or keep some cash available until inflation becomes clearer?

Sharing this perspective for discussion purposes only.