US PPI Inflation Higher Than Expected. Stock Markets React
The Producer Price Index report was released yesterday and showed higher than expected inflation indicators.
Data released on Thursday by the US Bureau of Labor Statistics revealed that the Producer Price Index (PPI) inflation indicator rose 1.6% for the United States.
This is an annual increase recorded for February, and that is after a 1% increase in January. The anticipated increase was only 1.1%, which means market expectations were thrown off considerably.
Core PPI numbers were released as well, showing a 2% increase, which is exactly what occurred in January of this year. The monthly Core PPI increase was 0.3%, although only 0.2% was expected.
How has the market reacted to the news? The US Dollar Index rose higher right away, climbing 0.13% after the PPI numbers were released and standing at 102.95 at the time of this writing.
Stock Market Reaction
The stock markets barely reacted to Consumer Price Index reports released recently that showed those numbers had increased as well. That casual shrugging off of the negative report is not what we saw from the stock markets for Wednesday.
Two of the three major indices closed low on Wednesday by the time trading ended. The Dow Jones Industrial was the only one ahead, with a gain of 0.10%. it may open low, though, as the full impact of the PPI numbers hit.
The Nasdaq Composite closed down 0.54%, with the S&P 500 index closing down 0.19%.
Now that major inflation indicators are in, the outlook for inflation in 2024 is not as bright as it was before. All market expectations have been undermined, though not significantly. The expectation was that the market was improving and the economy was getting better, but consumer pricing data shows otherwise.
With the cost of goods rising and overall inflation increasing, the US could be headed for a technical recession. Despite the poor inflation numbers, key tech stocks are doing very well, particularly those in the AI niche. Baidu, Amazon and Nvidia are all climbing and developing AI technology or components used in AI, which is boosting these stocks as the functionality of AI-driven products increases.
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