Broader Markets Tick Higher Despite Another Hot Inflation Reading…..

The S&P 500 and Nasdaq finished modestly higher, though the Dow hung around the flatline, as the markets assessed the past two days of mixed inflation data. The broader markets advanced even as uncertainty remained regarding the global economic impact of the Delta variant, while they continued to evaluate the recent progress on a trillion dollar infrastructure spending plan. Prices at the wholesale level unexpectedly accelerated as services prices led the way and following yesterday’s consumer price inflation report that showed signs of moderation but at a continued elevated rate. Treasuries were little changed, while the U.S. dollar eked out a gain. Gold rose modestly and crude oil prices dipped. In other economic news, jobless claims decelerated in line with forecasts. Meanwhile in corporate news, eBay topped Q2 expectations, and Sonos surprisingly swung to a profit and raised its guidance. Europe closed mostly higher but markets in the U.K. dipped following a heavy dose of data, while Asia finished mixed as China and Hong Kong snapped three-day winning streaks.

The Dow Jones Industrial Average ticked 15 points higher to 35,500, the S&P 500 Index rose 13 points (0.3%) to 4,461, and the Nasdaq Composite increased 51 points (0.4%) to 14,816. In moderate volume, 696 million shares were traded on the NYSE and 3.9 billion shares changed hands on the Nasdaq. WTI crude oil dipped $0.16 to $69.09 per barrel. Elsewhere, the gold spot price rose $2.00 to $1,755.30 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—ticked 0.1% higher to 93.00.

The Producer Price Index (PPI), showed prices at the wholesale level in July rose 1.0% month-over-month (m/m), above the Bloomberg consensus estimate calling for a 0.6% gain, and matching June’s increase. The core rate, which excludes food and energy, also increased 1.0% m/m, north of estimates of a 0.5% rise and matching the prior month’s gain. Y/Y, the headline rate was 7.8% higher, above projections of a 7.2% increase and compared to June’s 7.3% gain. The core PPI increased 6.2% y/y last month, topping estimates calling for it to match the prior month’s 5.6% rise.

The Bureau of Labor Statistics said nearly three-fourths of the July increase can be traced to a 1.1% advance in prices for final demand services, while prices for final demand goods rose 0.6%.

Weekly initial jobless claims came in at a level of 375,000 for the week ended August 7, in line with forecasts and compared to the prior week’s upwardly-revised 387,000 level. The four-week moving average rose by 1,750 to 396,250, and continuing claims for the week ended July 31 declined by 114,000 to 2,866,000, south of estimates of 2,900,000. The four-week moving average of continuing claims fell by 99,750 to 3,101,000.

Treasuries were little changed, with the yields on the 2-year note and 30-year bond flat at 0.22% and 2.00%, respectively, while the yield on the 10-year note ticked 1 basis point higher to 1.36%.

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