Market Jitters: Hotter-Than-Expected PPI Dampens Rate Cut Hopes as S&P 500 Ekes Out Record
Market Jitters: Hotter-Than-Expected PPI Dampens Rate Cut Hopes as S&P 500 Ekes Out Record
U.S. stock markets faced turbulence on Thursday as Wall Street absorbed a significantly higher-than-anticipated Producer Price Index (PPI) inflation report, tempering earlier optimism for a substantial September interest rate cut. Despite the broader market wavering, the S&P 500 managed to eke out a third consecutive record close, though the Dow Jones Industrial Average saw a slight decline and the Nasdaq Composite finished just shy of its own all-time high.
The July PPI data proved to be the primary driver of market sentiment, with month-over-month prices surging 0.9%, dramatically exceeding the expected 0.2%. Annually, producer prices climbed 3.3%, marking the steepest increase since February. Even core producer prices, which exclude volatile food and energy costs, experienced their largest rise in three years, signaling broad inflationary pressures.
The surprising inflation figures largely eroded the euphoria that had swept through Wall Street over the preceding two sessions, fueled by a Consumer Price Index (CPI) report that met expectations and suggested controlled inflation. Traders had nearly fully priced in a rate cut at the Federal Reserve’s upcoming meeting. However, by Thursday, while a cut remained the dominant bet, almost 10% of traders began to price in a rate hold, and bets on an aggressive 50-basis-point cut completely vanished.
Amidst the inflation shock, some individual stocks saw significant movement. Cryptocurrency exchange operator Bullish (BLSH) surged 10%, trading around $75—double its IPO price of $37. Meanwhile, Intel (INTC) shares jumped 7% following reports that the Trump administration is considering acquiring a stake in the U.S. chipmaker, a development that could reshape the semiconductor landscape.
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