The stock market reversed moderately higher at midday after November inflation at the wholesale level eased from October's pace but came in above expectations.
Indexes were modestly higher, with the Nasdaq composite up 0.3%, the S&P 500 up 0.2% while the Dow Jones Industrial Average inched up 0.1%. Small caps lagged as the Russell 2000 lost 0.3%.
Volume remained lower on the NYSE and Nasdaq compared with the same time on Thursday. Declining and advancing stocks were nearly even on the NYSE and Nasdaq.
Indexes are on track for a down week. The Nasdaq is looking at a 3% drop and the S&P 500 is off 2.5% for the week.
The Innovator IBD 50 ETF fell 0.6% at midday. Wingstop found support at its 50-day moving average, creating a secondary buy area following its Oct. 26 breakout.
Inflation Moderates In November
The November producer price index (PPI) rose 0.3% from the previous month and 7.3% on an annual basis. Economists had expected 0.2% and 7.2% increases, according to Econoday. It was a mixed report, with inflation above October's 0.2% pace but still cooling from the 8% annual rate in October.
Excluding food and energy prices, the PPI climbed 0.3% in November and 6.1% on a yearly basis, also a bit above the consensus.
BMO Capital Markets economist Jennifer Lee said that while goods costs saw only modest gains, a 38.1% surge in fresh and dry vegetables was the highest in years.
Stock market indexes got a momentary bump when the University of Michigan consumer confidence index came out at 10 a.m. ET. The survey registered 59.1, above estimate of 56.8.
All components of the index rose. One-year business conditions climbed 14% while long-term business conditions increased 6%. Perhaps more important for investors, the year-ahead inflation expectations fell from 4.9% to 4.6% in December. The survey noted it's the lowest reading in 15 months.
The benchmark 10-year Treasury yield rose 5 basis points to 3.54%.
Friday's data sets the stage for two major economic headlines next week.
The November consumer price index (CPI) comes out on Tuesday, while on Wednesday the Federal Reserve announces its next step in monetary policy.
There was little change in odds for this month's interest-rate increase, with nearly 75% betting on a half-point hike, according to CME Group's FedWatch. For the February meeting, odds for another 50-basis point hike remained around 50% while odds for a quarter-point increase stood at 42%.
Lululemon, Broadcom Among Stock Market Movers
Earnings reports and an unusually bullish analyst upgrade triggered some of Friday's bigger stock market moves.
Lululemon stretched its loss to more than 12% after the exercise-apparel company beat views late Thursday. Sellers took control after the retailer cited bloated inventories for the holiday season. Same-store sales missed analysts' estimates, too.
Lululemon is now below a 370.56 buy point after gapping down in heavy volume. The stock is on pace for its worst day since March 16, 2020, when it fell more than 21%, according to Dow Jones Market Data.
Broadcom beat sales and profit expectations late Thursday, and its outlook was slightly above views. The stock rose more than 3% as it climbs back above its 200-day moving average. Shares bounced off the 21-day exponential moving average this week.
Costco reversed higher at midday, up 1.7%, after a mixed quarterly report for the big box retailer. Earnings missed expectations but sales topped views. Same-store sales rose 6.6% on a year-over-year basis, but e-commerce sales fell 3.7%.
The stock is forming a cup-with-handle base, but the handle is now deeper than ideal and is burdened with heavy volume. The buy point is 542.68.
Netflix Gets Bullish Analyst Upgrade
Netflix rose 6% after Wells Fargo upgraded the stock to overweight from equal weight and raised the price target by a hefty 100, going from 300 to 400. A Wells Fargo analyst says Netflix has a favorable outlook for 2023 as it improves content and an ad-supported plan comes into the picture.
Activision Blizzard was down less than 1% after the Federal Trade Commission announced it is seeking to block Microsoft from acquiring the game maker. Microsoft shares were flat and off session lows.
