Early Gains Temper Amid Lack of Direction…..

Early gains for U.S. equities moderated in late-day action, but stocks were able to finish modestly higher, with yesterday’s surprising consumer price inflation report remaining an overhang. August inflation data continued to pour in, with the Producer Price Index dipping, but the core rate coming in hotter than expected. The inflation data appears to have solidified expectations that the Fed will remain aggressive with next week’s monetary policy decision looming. Treasury yields were mixed, and the U.S. dollar dipped after Tuesday’s jump, while crude oil prices rose, and gold lost ground. In other economic news, mortgage applications fell for a fifth-straight week. On the equity front, Starbucks was higher after it issued an upbeat forecast, and Dow component Johnson & Johnson rose after it announced a $5 billion share repurchase program, but Nucor Corporation fell sharply after delivering a softer-than-expected outlook. Europe was mostly lower, adding to Tuesday’s decline, while markets in Asia fell broadly on the heels of yesterday’s drop in the U.S. and the inflation data.

The Dow Jones Industrial Average rose 30 points (0.1%) to 31,135, the S&P 500 Index increased 13 points (0.3%) to 3,946, and the Nasdaq Composite advanced 86 points (0.7%) to 11,720. In moderate volume, 4.2 billion shares of NYSE-listed stocks were traded, and 4.8 billion shares changed hands on the Nasdaq. WTI crude oil gained $1.17 to $88.48 per barrel. Elsewhere, the gold spot price declined $12.20 to $1,705.20 per ounce, and the Dollar Index nudged 0.1% to the downside to 109.70.

Wholesale price inflation remains elevated, mortgage applications fall for fifth-straight week….

The Producer Price Index (PPI) showed prices at the wholesale level in August dipped 0.1% month-over-month (m/m), matching the Bloomberg consensus, and versus July’s upwardly revised 0.4% decrease. The core rate, which excludes food and energy, rose 0.4% m/m, topping estimates calling for a 0.3% gain and above the prior month’s upwardly adjusted 0.3% rise. Y/Y, the headline rate was 8.7% higher, south of expectations of an 8.8% increase and compared to the prior month’s unadjusted 9.8% rise. The core PPI was up 7.3% y/y last month, above estimates of a 7.0% rise but below July’s unadjusted 7.6% increase.

The MBA Mortgage Application Index declined 1.2% last week, following the prior week’s decrease of 0.8%. The index is down for a fifth-straight week as a 4.2% drop for the Refinance Index more than offset a 0.2% rise for the Purchase Index. The decrease came as the average 30-year mortgage rate moved 7 basis points (bps) higher to 6.01% and is up 298 bps versus a year ago.

Treasury yields were mixed, with the yield on the 2-year note 3 bps higher at 3.79%, while the yield on the 10-year note decreased 1 bp to 3.41%, and the 30-year bond rate was down 4 bps to 3.46%.

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