Dow Jones Reverses On Another Key Inflation Report After CPI Sparks Market Plunge
astontek.inc last edited by
The Dow Jones Industrial Average reversed higher after another key inflation report — the producer price index — arrived Wednesday in the wake of a stock market plunge from a hot consumer price index reading. Meanwhile, the 10-year Treasury yield is on the cusp of hitting June's 11-year high.
The U.S. Labor Department said the producer index, or PPI, fell 0.1% in August vs. the previous month, matching estimates. Wholesale inflation rose 8.7% from a year ago, down from July's 9.8% surge and in line with Econoday estimates.
On Tuesday, the CPI inflation rate eased to 8.3%, retreating from July's 8.5% and June's 9.1% rate, amid falling gas prices. The consumer price index rose 0.1% on the month. But Wall Street economists had expected the CPI to show a 0.1% monthly decline, bringing the CPI inflation rate down to 8%. Worse, core inflation accelerated more than expected, to 6.3%.
As a result, markets now believe there is a 38% chance of a full percentage point increase at the Federal Reserve's next meeting. Before Tuesday, Wall Street did not place odds on that possibility at all.
Meanwhile, electric-vehicle leader Tesla (TSLA) traded up 2% Wednesday. Among the Dow Jones industrials, tech titans Apple (AAPL) and Microsoft (MSFT) were higher after today's stock market open. Merck (MRK) rose 0.7% after Berenberg upgraded the stock to buy.
In the market's current volatility, Arista Networks (ANET), DoubleVerify (DV), Palo Alto Networks (PANW) and Pure Storage (PSTG) — as well as Dow Jones stock Chevron (CVX) — are among the top stocks to buy and watch. Keep in mind the market's increased volatility is a good reason for investors to be more defensive, especially after Tuesday's market dive.
After Wednesday's opening bell, the Dow Jones Industrial Average rose 0.3% after reversing from early losses, while the S&P 500 moved up 0.4%. The tech-heavy Nasdaq composite gained 0.35% in morning action.
Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) was up 0.4%, and the SPDR S&P 500 ETF (SPY) rose 0.3% in early trade.
The 10-year Treasury yield ticked higher to 3.43% Wednesday morning. On Tuesday, the 10-year Treasury yield notched its highest closing level since June 14 and is just shy of the 11-year high of 3.48% set on June 14.
U.S. oil prices inched lower Wednesday, as they continue to consolidate after recent gains. West Texas Intermediate futures traded back to below $87 a barrel.