U.S. Stocks Close Mixed Following Producer Price Inflation Data

Following the release of producer price inflation data, the major U.S. stock indexes turned in a mixed performance during trading on Friday.

The tech-heavy Nasdaq slid 93.14 points or 0.6 percent to 13,644.85, ending the session at its lowest closing level in well over a month.

The S&P also edged down 4.78 points or 0.1 percent to a one-month closing low of 4,464.05, while the narrower Dow rose 105.25 points or 0.3 percent to 35,281.40.

The major averages also turned in a mixed performance for the week. While the Dow climbed by 0.6 percent, the S&P 500 dipped by 0.3 percent and the Nasdaq tumbled by 1.9 percent.

The mixed performance on Wall Street came following the release of a Labor Department report showing producer prices climbed by slightly more than expected in the month of July.

The Labor Department said its producer price index for final demand rose by 0.3 percent in July following a revised unchanged reading in June.

Economists had expected producer prices to inch up by 0.2 percent compared to the 0.1 percent uptick originally reported for the previous month.

The report also showed the annual rate of producer price growth reaccelerated to 0.8 percent in July after slowing to just 0.2 percent in June. The rate of growth was expected to accelerate to 0.7 percent.

While the bigger than increase by the headline index led to renewed interest rate concerns among some investors, FHN Financial Macro Strategist Will Compernolle noted the more-important index excluding food, energy, and trade services rose in line with estimates.

“The data show that the last two months of consumer goods price disinflation is on solid footing and that more should be on the way,” said Compernolle.

He added, “This is the area of disinflation the Fed and market participants have been expecting for a while, mostly stemming from supply chain normalization.”

A separate report released by the University of Michigan showed a slight pullback in consumer sentiment in the month of August.

The report said the consumer sentiment index edged down to 71.2 in August after spiking to 71.6 in July. Economists had expected the index to slip to 71.0.

Sector News

Semiconductor stocks showed a significant move to the downside on the day, dragging the Philadelphia Semiconductor Index down by 2.3 percent to its lowest closing level in well over a month.

Considerable weakness was also visible among airline stocks, with the NYSE Arca Airline Index tumbling by 2.0 percent to a two-month closing low.

Computer hardware stocks also saw notable weakness, resulting in a 1.3 percent drop by the NYSE Arca Computer Hardware Index.

On the other hand, oil stocks moved higher amid a rebound by the price of crude oil, driving the NYSE Arca Oil Index up by 1.4 percent.

Gold stocks also turned in a strong performance despite a modest decrease by the price of the precious metal, with the NYSE Arca Gold Bugs Index climbing by 1.1 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday, with the Japanese markets closed for a holiday. China’s Shanghai Composite Index plunged by 2.0 percent, while Hong Kong’s Hang Seng Index slid by 0.9 percent.

The major European markets also showed notable moves to the downside on the day. While the German DAX Index slumped by 1.0 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index tumbled by 1.2 percent and 1.3 percent, respectively.

In the bond market, treasuries moved sharply lower in reaction to the latest inflation data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.8 basis points at 4.168 percent.

Looking Ahead

Reports on import and export prices, retail sales, industrial production and housing starts are likely to attract attention next week along with the minutes of the latest Federal Reserve meeting.

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