S&P 500 producer prices rise after pointing to peak inflation

Traders work on the floor of the New York Stock Exchange during morning trading on January 17, 2023 in New York City.

Michael M. Santiago | Good pictures

The S&P 500 rose on Wednesday after the latest data provided another sign that inflation, though still high, is starting to ease.

The broader market index rose 0.4%, while the Nasdaq composite advanced 0.9%, heading into its eighth straight day. Meanwhile, the Dow Jones industrial average fell 95 points, or 0.3%.

The moves came after that The latest reading of the producer price index, which measures firms’ input costs and can be a leading indicator of future inflation, showed a 0.5% decline in December. Economists polled by Dow Jones had expected a 0.1% decline. That provided relief to investors who believed inflation would recede and the Federal Reserve would slow or halt its rate hikes.

“Even as the Fed aggressively raises rates through 2022 to control inflation, the December PPI print bodes well for the Fed’s recent easing of its tightest monetary policy,” said Greg Bassuk, CEO of AXS Investments.

“While there is still consensus for the Fed to raise rates again in February, the falling inflation figures represent a powerful data point supporting the possibility that the Fed’s rate hikes will end here in 2023,” he said.

U.S. Treasury yields fell after the release of data that gave growth-oriented stocks such as Tesla and Plug Power a boost. Amazon rose more than 1% even as it began a major round of layoffs on Wednesday.

Elsewhere, shares of United Airlines rose after the company beat Wall Street estimates In the latest quarter, driven by strong travel demand.

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Meanwhile, Moderna shares rose after the drug company targeted its vaccine for respiratory syncytial virus. Disease can be prevented In older adults.

The Dow closed lower on Tuesday, snapping a four-day winning streak. The S&P 500 fell, while the Nasdaq ended its seventh consecutive positive day. Those moves follow earnings results from big banks that diverge the paths forward for names in the same sector.

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