On Thursday, major indexes on Wall Street were muted following the anticipated monthly rise in producer prices, with market participants looking forward to comments from Fed Chair Jerome Powell later in the day for insights into the future of interest rates.
The producer price index (PPI) for final demand increased by 0.2% monthly in October, aligning with projections, although the yearly increase of 2.4% exceeded expectations slightly.
In addition, jobless claims decreased by 4,000 to a seasonally adjusted figure of 217,000 for the week ending Nov. 9, which was below estimates.
“The PPI indicates that inflation is easing, albeit gradually, consistent with Powell’s earlier comments this month that the risks concerning inflation and the labor market are balanced,” noted Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
Shifts in inflation expectations are evident in the bond market, where the yield on the U.S. 10-year Treasury has risen to its highest level since July.
Traders currently assign a 79.1% probability to a 25-basis point cut at the Federal Reserve’s meeting in December, down from 82% before the announcement of the data, as per the CME FedWatch tool.
The Dow Jones Industrial Average dropped 14.77 points, or 0.03%, to reach 43,943.42; the S&P 500 decreased by 4.30 points, or 0.07%, to 5,981.08; and the Nasdaq Composite fell 10.19 points, or 0.05%, to 19,220.53.
The Dow, known for its blue-chip stocks, found support from a 7.1% rise in Walt Disney shares, following the entertainment company’s quarterly earnings that surpassed Wall Street expectations and provided strong forecasts for the future.
On the other hand, consumer discretionary stocks put pressure on the S&P 500, with electric vehicle manufacturer Tesla dropping 2.5%, and Amazon.com declining by 0.7%.
Powell is set to share his economic insights with business leaders in Dallas, one day after some Fed policymakers redirected their focus to inflation risks as they consider when and how aggressively to lower interest rates.
Fed governor Adriana Kugler remarked that significant progress has been made toward achieving the central bank’s employment and inflation objectives, while Richmond Fed President Tom Barkin suggested that elevated union wage agreements and potential tariff increases may lead Fed officials to be more cautious about claiming victory over high inflation.
The anticipated post-election rally in stocks seemed to be losing momentum, even as attention shifted to the possible inflationary impacts of the policies proposed by President-elect Donald Trump’s administration.
“Since the election, there’s been a substantial shift towards speculative stocks, and we’re now seeing a pullback into higher-quality names,” explained Eric Clark, portfolio manager of Rational Dynamic Brands Fund.
Tapestry surged 13.6% to reach its highest point since early 2014, after the parent company of Coach announced it was terminating its $8.5 billion acquisition agreement with Capri Holdings, which had been blocked by a U.S. judge. Capri’s shares turned around, gaining 5%.
Comments from Fed official John Williams are anticipated later today.
