Core inflation rose more than expected in April 2026, hitting 3.8% year-over-year compared to the 3.5% forecast. Seeking Alpha is keeping its ‘Buy’ rating on the SPDR S&P 500 ETF Trust (SPY).

The challenge here is for the Federal Reserve, which now has to navigate these turbulent waters while trying to keep inflation in check.

SPY’s resilience amid inflation

The SPY ETF has managed an 8% annual return during similar inflationary conditions since 2010. The SPY shares rose by 1.2% in after-hours trading after the new inflation numbers came out on May 10.

Energy costs went up by 5% and services by 4%.

Crypto as a hedge

Bitcoin has enjoyed a 12% price surge over the last month as investors consider it a hedge against currency devaluation. Bitcoin’s market cap leapt by $150 billion, as reported by CoinDesk.

What this means for investors

Expert analysis from The Block indicates that institutional investors could reallocate 15-20% from equities like SPY to digital assets with inflation sustained above 3%.

Higher inflation rates often lead to the Federal Reserve raising interest rates, which might invoke volatility in both equity and cryptocurrency markets.