4:16pm: Benchmarks end the week mixed
The Dow closed Friday up 105 points, 0.3%, at 35,281, while the Nasdaq Composite slid 93 points, 0.7%, to 13,645 and the S&P 500 dipped 5 points, 0.1%, to 4,464. The small-cap Russell 2000 index ticked up 1% to 1,924.
The S&P 500 and Nasdaq each closed lower for the second consecutive week, the first such streak for the Nasdaq in 2023. The Dow managed to escape that same fate, ending the week up 0.6%.
That could mean more choppy waters going forward, said Greg Bassuk, CEO of AXS Investments.
“Investors continue to try to hang their hat on more consistency” Bassuk said. “What we’re seeing with these mixed results certainly increases the likelihood of more volatility ahead.”
12:05pm: Inflation fears weigh on sentiment
US stocks were mixed at noon as economic data released this morning renewed fears that the Federal Reserve may continue to hike interest rates to curb inflation.
The Nasdaq had shed 91 points or 0.7% at 13,649 points and the S&P 500 was down 6 points or 0.1% at 4,463 points, while the Dow Jones had added 94 points or 0.3% at 35,271 points.
“Strength in United Heath has helped the Dow to outperform other US indices today, as the stronger PPI figures has investors worried about a return to Fed rate hikes later in the year,” commented IG chief market analyst Chris Beauchamp.
“As earnings season winds down the focus is squarely back on inflation, and after months of declines investors are concerned that price pressures will pick up again into 4Q.”
9:40am: Stocks weaken after hot PPI figures
US markets opened lower as hot wholesale prices data increased nerves that the Federal Reserve may not be done raising interest rates.
Shortly after the opening bell, the Dow Jones Industrial Average was down 64.10 points, 0.2%, at 35,112.05, the S&P 500 was down 17.91 points, 0.4%, at 4,450.92 while the Nasdaq Composite fell 69.36 points, 0.5%, to 13,668.63.
US producer price inflation rose 0.8% on an annual basis in July, up from annual growth of 0.1% in June, and above forecasts for a rise of 0.7%. On a monthly basis, producer prices rose 0.3% in July, faster than no-change in June from May, and above the 0.2% expected.
Service costs rose by the most in nearly a year, reflecting increases in categories including portfolio management, outpatient care and passenger transportation.
Kieran Clancy at Pantheon Macroeconomics noted the month-to-month increase in the core is the largest since November 2022.
But he thinks this will prove temporary, however, given the still-huge scope for margin re-compression and the downward pressure on global goods prices from the excess capacity in China’s manufacturing sector.
He expects a "sustained run of outright declines ahead."
"China effectively sets the world price for many traded goods, and excess capacity is driving those prices down. China’s PPI for manufactured goods fell by 4.7% in the year to June, and the downward pressure is likely to persist," he pointed out.
While equities languished the dollar rallied as traders bet that interest rates would stay at inflated levels for some time.
Yesterday, San Francisco Federal Reserve Bank President Mary Daly said the central bank had "more work to do" in getting inflation down.
7:00am: US futures flat ahead of wholesale price inflation data
US stocks are expected to make a subdued start to trading on Friday, ahead of producer prices figures, after a prominent Federal Reserve official said there was more to be done to tackle inflation.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.1% higher, while those for the S&P 500 were little changed, and contracts for the Nasdaq 100 futures were down 0.2%.
Producer price inflation figures are due at 08:30 EST following hard on the heels from Thursday’s consumer price inflation report which showed prices grew slower than expected in July.
According to the Bureau of Labor Statistics, the US yearly inflation rate accelerated to 3.2% in July, from 3.0% in June, snapping a streak of 12 successive slowdowns. The latest figure was shy of consensus, however, which had chalked in an acceleration to 3.3%, according to FXStreet. The annual core inflation rate - which excludes food and energy - of 4.7% was in line with expectations.
Paul Ashworth, chief North America economist at Capital Economics, said: "Overall, there's nothing here to suggest the Fed needs to push ahead with further interest rate hikes this year."
Joshua Mahony at Scope Markets said: “Inflation remains the key theme, with US PPI released this afternoon."
“Much like yesterday's CPI figure, base effects make it almost nailed on that we will see US PPI rise as the July 2022 figure of -0.3% is replaced.”
“Nonetheless, with Chinese input prices down -4.4%, any increase above the current US PPI reading of 0.1% does little to shift the notion that factory costs are disinflationary as things stand.”
But San Francisco Federal Reserve Bank President Mary Daly was in hawkish mood after the CPI report saying although inflation is coming down it is still too high, leaving the central bank with "more work to do."
Speaking to Yahoo Finance Daly said: “It is not a data point that says victory is ours. There's still more work to do."
Daly said she is highly data dependent and is reserving her judgment for how much work is needed to bring down inflation until the Fed’s September policy meeting, when she will pencil in her projections for interest rates.
In other economic news today, the University of Michigan’s consumer sentiment index is forecast to edge down to a preliminary reading of 71 in August, down from 71.6 in July.
The company diary looks fairly thin, taking a breather after the recent slew of results, while next week it is the turn of the retailers with Walmart, Home Depot, and Target among the companies reporting.