4:15pm: Investors eye CPI following slower wholesale inflation
Stocks finished on mixed footing Tuesday.
The Dow Jones gained 221 points, or 0.5%, to close at 42,518. The S&P 500 inched up 7 points, or 0.1%, to 5,843, while the Nasdaq Composite fell 43 points, or 0.2%, to 19,044.
Investors digested the latest Producer Price Index (PPI) data, which showed wholesale inflation rose less than expected in December. This report, coupled with news that the incoming Trump administration might implement tariff hikes gradually, influenced market sentiment.
The energy, healthcare, and materials sectors saw gains, with shares of companies like Chevron and UnitedHealth contributing to the Dow's rise. However, major tech stocks faced some pressure, with Nvidia declining nearly 2%.
Traders are now looking ahead to Wednesday's Consumer Price Index (CPI) report, which will provide further insights into inflation trends and potentially impact Federal Reserve policy decisions.
2:30pm: Tech bounces back
Stocks have turned higher in today's trading session, with major indices posting gains across the board.
The Dow Jones is leading the advance, up 0.5%. The S&P 500 has climbed 0.3%, while the Nasdaq is showing a modest gain of 0.1%.
The market's positive turn comes after a softer-than-expected Producer Price Index (PPI) report, which showed wholesale prices rose less than anticipated in December. This data has helped alleviate some concerns about persistent inflation and potentially influenced investor sentiment regarding the Federal Reserve's future monetary policy decisions.
Earlier in the day, stocks had given up initial gains following the PPI data release, but buyers stepped in to push indices back into positive territory. The tech sector, which had been under pressure in recent sessions, is showing signs of recovery, with companies like Nvidia rebounding from yesterday's losses.
12:41pm: PPI numbers "encouraging"
The December Producer Price Index (PPI) came in below expectations, with a broad-based weakness across most components, except energy, and anticipated a wider range of outcomes following the upcoming consumer price data release.
Charlie Ripley, senior investment strategist for Allianz Investment Management, considers the numbers “encouraging.”
"While the wholesale price data does not necessarily translate directly into consumer price data, it was encouraging to see the PPI Index come in well below expectations," Ripley commented.
"When excluding food and energy the index showed no increase in producer prices in December. The weakness was broad based across most components with the exception of energy, where we saw a noticeable increase in gasoline prices last month and some strength in airline pricing.
"Market reaction in the bond market was relatively muted, but we are expecting a wider range of outcomes following tomorrow's release on the latest consumer price data."
11:45am: Small business optimism up
The US NFIB Small Business Optimism Index has jumped to its highest level since October 2018, above the 51-year average of 98. The index rose by 3.4 points in December to 105.1.
The increase was attributed by NFIB chief economist Bill Dunkelberg to small business owners feeling more certain about the economic agenda of the incoming Trump administration.
“Expectations for economic growth, lower inflation, and positive business conditions have increased in anticipation of pro-business policies and legislation in the new year,” Dunkelberg said.
Meanwhile, the three major US indexes edged lower following a sofer-than-expected PPI reading.
The Nasdaq shed 0.4%, while the S&P 500 was down 0.3% and the Dow Jones slipped 0.2%.
“While headline producer prices came in lower than anticipated, and the core gauge remained unchanged, the Fed’s restrictive policy outlook persists, supported by strong labour market data and potential pro-inflationary measures from President-elect Trump,” IG senior technical analyst Axel Rudolph commented.
“Reports of discussions on raising tariffs and declaring an economic emergency further shaped expectations. Market consensus remains divided, with a slim majority predicting a single rate cut this year, while nearly a third anticipate no cuts."
9.52am: Wall Street gains at open after producer price inflation undershoots
Wall Street enjoyed a positive start to Tuesday’s session after data earlier on showed producer price inflation came in softer-than-expected for December.
The Nasdaq ticked up 0.8% after the bell, while the S&P 500 and Dow Jones added 0.5% each.
US Bureau of Labor Statistics figures on Tuesday showed the producer price index climbed by 0.2% in December, against November’s 0.4% rise and expectations for 0.3%.
Core producer prices, excluding energy and food, increased by 0.1% in line with November’s rise and also came in lower than expected.
Attention was on the producer price inflation reading before consumer price index data on Wednesday, after markets have slashed expectations for rate cuts in 2025.
8.41am: US producer prices climb slower than expected
US producer price inflation undershot expectations for December, figures showed on Tuesday.
According to the US Bureau of Labor Statistics, the producer price index climbed by 0.2% over the month, against November’s 0.4% rise.
Core producer prices, excluding energy and food, increased by 0.1%, in line with November’s rise.
Analysts had expected the headline rate to have climbed by 0.3%, as core producer prices grew 0.3%.
On an annual basis, both headline and core producer price inflation rose by 3.3%, below expectations for 3.4% and 3.8% increases respectively.
Futures pointed to a 0.9% gain for the Nasdaq ahead of Tuesday's opening bell.
The S&P 500 and Dow Jones were seen 0.7% and 0.5% higher respectively in the meantime.
7.18am: Bitcoin recoups losses
Bitcoin headed higher on Tuesday to recoup losses seen the day earlier amid a shaky start to 2025 for the crypto markets.
Come midday, Bitcoin was up 2% at US$96,416, having ducked below the US$90,000 mark on Monday to hit its lowest level since November.
Bitcoin reversed on a drop since the year’s start to sit higher by Tuesday as a result.
Smaller tokens Ether and Ripple also gained on Tuesday, by 2.4% and 1.8% respectively, to also recoup declines seen on Monday.
Higher Treasury yields, driven by inflation risks linked to President-elect Donald Trump’s trade and immigration policies, have cooled investor appetite for crypto.
6.42am: Wall Street eyes gains ahead of producer price data
Wall Street looked set to kick off Tuesday in recovery mode as stocks continued to regain after a sharp drop last Friday on strong job market data.
Futures had the Nasdaq and S&P 500 up 0.5% and 0.4% respectively ahead of the opening bell, while the Dow Jones was seen 0.3% higher.
A mixed showing on Monday saw the Nasdaq drop further but S&P 500 and Dow Jones rise as markets axed bets for rate cuts in 2025 following Friday’s expectation-beating non-farm payroll figures.
Tuesday’s producer price index reading for December has drawn attention as a result, ahead of consumer price inflation data on Wednesday.
Analysts are expecting the headline rate to have climbed by 0.3% against November’s 0.4% rise, with the core rate seen edging up by 0.3%, compared to 0.2% previously.
Tickmill Group partner Patrick Munnelly noted the figures came “as expectations mount for inflation to rise when President-elect Donald Trump reveals his policies on tariffs, immigration, and taxes, potentially as early as his inauguration next week”.
He added: “Investor anxiety has been heightened since Friday's clearly strong US payrolls report, which caused yields to rise and reduced the likelihood of Federal Reserve interest rate cuts.”