Wall St edges up after ‘mixed’ producer inflation data, all eyes on CPI

Wall St edges up after ‘mixed’ producer inflation data, all eyes on CPI
Wall St edges up after ‘mixed’ producer inflation data, all eyes on CPI

By Bansari Mayur Kamdar and Shristi Achar A

(Reuters) – Wall Street’s main indexes inched up on Tuesday as investors assessed a mixed producer prices reading and awaited crucial consumer prices data due later this week that could provide more clarity on the interest rate path in the world’s No.1 economy.

US producer prices increased more than expected in April amid strong gains in the costs of services and goods, leading traders to pare back bets of a first rate cut in September.

“Investors are looking backwards at some of the revisions of PPI and saying, well, that wasn’t all that bad, but you still wind up with a fairly hot number,” said Paul Nolte, portfolio manager at Kingsview Asset Management.

“What investors may also be looking at is that maybe some of that flows through to earnings for a lot of companies in the way of higher prices.”

Federal Reserve Chair Jerome Powell also said the PPI report was more “mixed” than “hot” given that prior data was revised lower.

Powell added that he did not expect the central bank’s next move on interest rates to be an increase, despite the recent run of higher-than-expected inflation.

Focus will now be on Wednesday’s consumer price figures to help assess whether the upside surprises in the first quarter were a blip or a worrying trend.

Sticky inflation and persistent labor market strength have prompted financial markets and most economists to push back expectations for an initial Fed interest rate cut to September, from March seen at the start of the year.

Still, stocks have rallied so far this year, with all three major US indexes hovering near fresh record highs thanks to better-than-expected earnings for the first quarter and hopes that the Fed will cut rates sometime this year.

At 11:15 am ET, the Dow Jones Industrial Average was up 41.64 points, or 0.11%, at 39,473.15, the S&P 500 was up 9.36 points, or 0.18%, at 5,230.78, and the Nasdaq Composite was up 69.83 points, or 0.43 %, at 16,458.07.

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US-listed shares of Alibaba shed 6.7% after reporting an 86% drop in fourth-quarter profit.

On Holding climbed 15.7% after the footwear maker posted a beat-and-raise quarter for sales on strong demand for its running shoes.

Meanwhile, US President Joe Biden unveiled a bundle of steep tariff increases on an array of Chinese imports including electric vehicles, computer chips and medical products.

US-listed shares of Chinese EV maker Li Auto slid 2.5%, while Tesla gained 4.3% to lead gains among megacap growth and technology stocks.

GameStop jumped 73.5%, set to extend its rally after flag bearer Roaring Kitty posted on X.com for the first time in three years.

Other 2021 meme rally participants and highly shorted stocks such as AMC Entertainment and Koss Corp rose 88.6% and 46.2%, respectively.

Advancing issues outnumbered decliners by a 2.78-to-1 ratio on the NYSE and by a 2.23-to-1 ratio on the Nasdaq.

The S&P index recorded 25 new 52-week highs and no new lows, while the Nasdaq recorded 38 new highs and 32 new lows.

(Reporting by Bansari Mayur Kamdar and Shristi Achar A in Bengaluru; Editing by Sriraj Kalluvila and Devika Syamnath)

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