Wall Street ends higher as softer producer prices data boosts rate-cut bets: Check Everything Here

Wall Street ends higher as softer producer prices data boosts rate-cut bets: Check Everything Here

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Tuesday’s gains in U.S. indices saw them close at a nearly two-week high, as lower producer pricing data supported expectations of a Federal Reserve interest rate drop in September.

Wall Street ends higher as softer producer prices data boosts rate-cut bets: Check Everything Here
Wall Street ends higher as softer producer prices data boosts rate-cut bets: Check Everything Here

Because less expensive services offset an increase in the cost of products, U.S. producer prices rose less than anticipated in July, suggesting that inflation remained mild. The PPI grew 2.2% in the 12 months ending in July, following a 2.7% gain in June.

Investors are currently hedging their bets on an aggressive rate decrease by the US central bank by awaiting key consumer pricing data for July on Wednesday and retail sales data on Thursday.

“The core PPI number furthers the narrative that the Fed has done an excellent job of keeping inflation relatively under control and that the more likely move is going to be a rate cut sooner rather than later,” said Michael James, managing director of equity trading at Wedbush Securities.
“You have the CPI print tomorrow morning. Any data point is going to have an outsized influence on the market because people are so jittery right now.”

According to CME’s FedWatch Tool, traders now perceive a 55% possibility of a 50 basis point rate drop by the US Federal Reserve, up from less than 50% before the announcement.

The S&P 500 (.SPX) opened Monday’s trading session almost unchanged, while the Nasdaq (.IXIC) saw just slight gains. This was the result of a tumultuous week that included conflicting economic data and a rate hike by Japan’s central bank.

The Nasdaq Composite (.IXIC) opens new tab gained 407.00 points, or 2.43%, to 17,187.61, while the S&P 500 (.SPX) opens new tab gained 90.04 points, or 1.68%, to conclude at 5,434.43 points. The Dow Jones Industrial Average (.DJI), which opens in a new tab, increased to 39,765.64 by 408.63 points, or 1.04%.

The two best-performing sectors were information technology (.SPLRCT), which opens a new tab, and consumer discretionary (.SPLRCD), which opens a new tab.

With OPEC’s decision to lower its projection for demand growth in 2024, concerns about supply threats posed by the escalating conflict in the Middle East subsided, and energy shares (.SPNY), opening a new tab, fell on lower oil prices.

The small-business-focused Russell 2000 Index (.RUT), opens in a new tab, increased by 1.6%.

Starbucks (SBUX.O), opens new tab, was the best performer on the S&P 500, up 24.5%, marking its largest percentage increase in a single day, following the coffee vendor’s appointment of Brian Niccol as chairman and CEO of Chipotle Mexican Grill’s (CMG.N), opens new tab.

Shares of Chipotle dropped 7.5%.

BuzzFeed (BZFD.O) had a 25.9% increase in its new tab value after reducing its net loss from $22.5 million to $6.6 million in the second quarter of the previous year.

On the NYSE, advancing items exceeded declining ones by a ratio of 4.36 to 1. A 2.59-to-1 ratio of advancers to decliners was observed on the Nasdaq.

As for the Nasdaq Composite, it registered 128 new lows and 55 new highs, while the S&P 500 recorded 17 new 52-week highs and three new lows.

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