Stocks Show Mixed Reactions To June Producer Inflation Data

Stocks gave varied reactions on Friday morning to the June Producer Price Index from the U.S. Bureau of Labor Statistics rising 0.2% on a monthly basis.

June PPI Report: Key Highlights

• In June, the headline PPI for final demand rose by 0.2% month-over-month, rebounding sharply from the upwardly revised flat reading in May and surpassing economists' expectations – as tracked by TradingEconomics – of a 0.1% increase.
• The June rise in the index for final demand is attributed to a 0.6% monthly increase in prices for final demand services, while the index for final demand goods decreased by 0.5%.
• The 2.6% annual surge in the headline number represented a 0.2 percentage point increase from the upwardly revised May print, and topped estimates of 2.3%.
• The core PPI – which tracks prices for final demand less foods, energy, and trade services – advanced at a 0.4% monthly pace, advancing from May's upwardly revised 0.3% growth and surpassing estimates of 0.2%.
• On an annual basis, the core PPI climbed by 3.1%, up from the previous 2.3% and marking the highest rate of increase since April 2023.

Also Read: More Inflation Cheer As June PPI Lighter Than Expected, Lifting Markets Ahead Of Friday’s Bank Earnings

Before the PPI release, markets assigned a 6.7% probability of a rate cut to 5.00%-5.25% in July, a 91.7% chance of maintaining that range in September, and a 54.6% probability of a further cut to 4.75%-5.00% in November, according to the CME FedWatch Tool.

Treasury yields gave mixed reactions to the PPI data. The rate-sensitive two-year yield slipped to 4.485% before the market open, while the long-dated 10-year yield ticked up to 4.205%. The iShares 20+ Year Treasury Bond ETF TLT slid 0.37%. The dollar fell slightly.

Gold, as tracked by the SPDR Gold Trust GLD, slipped 0.25%.

The S&P 500 index was up 0.65%, while the SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500, ticked up 0.19% on Friday morning.

The tech-heavy Nasdaq Composite was up 0.71% on Friday morning to 18,412, while the Invesco QQQ Trust QQQ picked up 0.15%.

Price Action: Retailers gave mixed reactions to the PPI data. Walmart Inc. WMT was 0.42% lower at $69.48, while Amazon.com, Inc. AMZN slipped 0.32% to $194.42.

SPDR S&P Retail ETF XRT ticked 1.35% higher, while VanEck Retail ETF RTH gained 0.45% and Direxion Daily AMZN Bull 2X Shares AMZU declined 0.95% on Friday morning.

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