Today’s main market catalyst was the July U.S. Producer Price Index (PPI). Producer prices were unchanged month-over-month, versus expectations for a 0.2% increase, while core PPI rose 0.2%, also below expectations. Combined with Wednesday’s softer CPI data, the report reduced concerns that the Federal Reserve would need to raise interest rates in September. Treasury yields moved lower as traders reduced rate-hike expectations.
The market reacted bullishly to the news. Lower inflation pressure and falling yields supported risk assets, particularly technology stocks. The S&P 500 gained about 0.7% and closed at a new all-time high of 7,798.99, while the Nasdaq gained about 0.8% and the Dow edged higher. Oil also fell more than 2%, providing another positive factor for inflation expectations. Overall, today’s reaction shows that the market interpreted the economic data as “good news for equities”—cooler inflation reduces the immediate pressure on the Fed and supports the bullish market structure
Disclaimer
Educational example only. Signals are not financial advice; trade at your own risk.