Stocks climb as July PPI stokes Fed speculation
Stocks rose and bond yields fell after the latest US inflation data reinforced speculation the Federal Reserve will be able to deploy its widely anticipated interest-rate cut in September.
Equities pushed higher in early New York trading, with Nvidia Corp. leading gains in megacaps. Starbucks Corp. surged 13% after appointing a new chief. Home Depot Inc. fell after lowering its forecast of a key sales metric for the year on expectations that consumers will continue to hold back spending.
The producer price index for final demand increased 0.1% from a month earlier, according to a Bureau of Labor Statistics report. The median forecast in a Bloomberg survey of economists called for a 0.2% gain. Compared with a year ago, the PPI rose 2.2%. Excluding the volatile food and energy categories it was unchanged in July from the prior month, the tamest reading in four months.
The recent easing of price pressures has bolstered Fed officials’ confidence that they can start to lower borrowing costs while refocusing their attention on the labor market, which is showing greater signs of slowing.
S&P 500 futures rose 0.6%. Treasury 10-year yields declined three basis points to 3.88%. Oil declined, with a likely escalation in the Middle East conflict offset by the International Energy Agency expecting a surplus if OPEC+ adds barrels as planned in the next quarter.
US technology stocks are under “significant pressure” as investor positioning remains extended on the bullish side despite the past month’s selloff, according to Citigroup Inc. strategists.
The team led by Chris Montagu said there’s still about $22.5 billion worth of long positions on futures tracking the tech-heavy Nasdaq 100 Index.
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