Stocks finished higher Tuesday as investors reacted to cooler-than-expected inflation data while awaiting a second key inflation report slated to be released on Wednesday.
The Dow Jones Industrial Average gained 408 points, or 1.04% to finish the session at 39,765.64, while the S&P 500 rose 1.68% to 5,434.43, and the tech-heavy Nasdaq surged 2.43% to end the day at 17,187.61.
The producer price index, which measures wholesale prices, increased 0.1% last month, lower than economist forecasts.
“This is a pivotal week for data following on the heels of the mini-panic we saw at the beginning of the month, as traders will be looking to retail sales for a read on the consumer and also keeping in mind that PPI and CPI inflation data are front and center for the Fed,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
He added the PPI data is good news for those investors who worried the Fed would have to be more cautious in lowering interest rates due to lingering inflation.
The consumer price index is scheduled to be released Wednesday morning and is expected to show an increase of 0.2% month over month, up from a 0.1% decline in the prior month.
"If tomorrow’s CPI report comes in lower than expected, like this morning’s PPI report did, then the Fed truly has a green light to cut rates by 50 bps at their next meeting if they deem it necessary to quickly get back to neutral in the face of a looming slowdown in the economy," Zaccarelli said.
Updated at 12:33 PM EDT
Building gains
Stocks are adding to firm early gains heading into the afternoon session, with the S&P 500 up 69 points, or 1.3%, a move that would trim the benchmark's August decline to around 2%.
Nvidia's two-week high is helping the Nasdaq, which is up 324 points, or 1.9% on the day, while the Dow gained 292 points to test the 40,000 point mark.
$SPX faced early challenges yesterday but closed higher, continuing the oversold rally. The 20-day MA is nearing 5410, where the chart gap would be filled. This morning, $SPX reached 5400, suggesting the rally might be ending. A close above 5410 would have to be respected
— Lawrence G. McMillan (@optstrategist) August 13, 2024
Updated at 10:52 AM EDT
Chip on its head and shoulders ...
Nvidia shares hit a two-week high in early Tuesday trading as investors returned to megacap tech stocks following last week's slump and a softer-than-expected reading of wholesale inflation for the month of July.
Nvidia shares were last marked 5.03% higher in early trading to change hands at $114.50 each, pegging the stock's six-month gain at 59%.
$nvda is the gift that keeps giving for cash flow and market clues - it cleared $111 and paused at $113 resistance area for now to trim. $116 above it’s the major pic.twitter.com/1vvFuNi8v7
— Scott Redler (@RedDogT3) August 13, 2024
Updated at 9:38 AM EDT
Solid start
The S&P 500 was marked 44 points higher, or 0.83%, in the opening minutes of trading, while the Nasdaq gained 210 points, or 1.25%.
The Dow, meanwhile, was up 175 points while the Russell 2000 slipped 0.9%.
S&P 500 Opening Bell Heatmap (Aug. 13, 2024)$SPY +0.63%🟩$QQQ +1.06% 🟩$DJI +0.37% 🟩$IWM +0.65% 🟩 pic.twitter.com/CGFpnJGoUc
— Wall St Engine (@wallstengine) August 13, 2024
Updated at 8:36 AM EDT
Cooling inflation
Stocks extended gains after a softer-than-expected reading for July wholesale inflation, which showed producer prices rising 0.1% on the month, and 2.2% on the year.
U.S PPI (MOM) (JUL) ACTUAL: 0.1% VS 0.2% PREVIOUS; EST 0.2%
— First Squawk (@FirstSquawk) August 13, 2024
U.S PPI (YOY) (JUL) ACTUAL: 2.2% VS 2.6% PREVIOUS; EST 2.3%
U.S CORE PPI (MOM) (JUL) ACTUAL: 0.0% VS 0.4% PREVIOUS; EST 0.2%
U.S CORE PPI (YOY) (JUL) ACTUAL: 2.4% VS 3.0% PREVIOUS; EST 2.6%
U.S PPI EX.…
Futures tied to the S&P 500 now suggest a 33 point opening bell gain, with the Nasdaq called 167 points to the upside with the Dow priced for an opening bell gain of around 115 points.
Benchmark 10-year Treasury note yields slipped 4 basis points to 3.885% immediately following the data release, while 2-year notes eased to 3.979%.
Updated at 8:28 AM EDT
Starbucks goes spicy?
Starbucks (SBUX) shares soared higher in premarket trading after the world's biggest coffee chain tapped Chipotle Mexican Grill's (CMG) Brian Niccol as its new CEO.
Nicccol, who has run the fast-food chain since 2018, will replace the underperforming Laxman Narasimhan, who was reportedly ousted at the behest of activist investors following a series of disappointing quarterly earnings.
Starbucks shares were last marked 14.2% higher in premarket trading to indicate an opening bell price of $88.02 each.
STARBUCKS JUST STOLE CHIPOTLE'S CEO
— Evan (@StockMKTNewz) August 13, 2024
Chipotle $CMG CEO Brian Niccol just announced he has accepted the role as CEO of Starbucks $SBUX effective at the end of this month
Chipotle has appointed Scott Boatwright, Chief Operating Officer, as Interim CEO pic.twitter.com/Db85RYAcT0
Check back for updates throughout the trading day
Stocks ended mixed last night, with the merest of gains for the S&P 500, as markets regrouped from last week historic volatility surge and shifted focus to the lineup of inflation readings over the coming days. Those reports could cement the case for a Federal Reserve interest-rate cut next month in Washington.
The Commerce Department will publish factory-gate inflation figures at 8:30 a.m. U.S. Eastern Time this morning, with a key reading of consumer price inflation expected at the same time tomorrow.
Traders remain split on the size of next month's likely cut but have effectively locked in the first Fed rate reduction since the 2020 pandemic. The current Fed Funds rates sits a a 23-year high of between 5.25% and 5.5%.
Related: Bank of America's CEO flags a big Fed risk
Benchmark 10-year Treasury bond yield eased to 3.923% in overnight trading ahead of today's PPI inflation release, while 2-year notes were last seen trading at 4.029%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.07% higher at 103.206 heading into the start of the New York trading session.
CBOE Group's VIX index, meanwhile, was marked 2% lower in overnight trading and fell below the $20 mark for the first time since Aug. 1.
On Wall Street, futures suggest a firmer open for the three major benchmarks, with the S&P 500 called 20 points higher and the Dow Jones Industrial Average priced for a 35-point advance.
The tech-focused Nasdaq, meanwhile, is looking at a 100-point gain, thanks in part to early premarket advances for Nvidia (NVDA) , Tesla (TSLA) and Advanced Micro Devices (AMD) .
Home Depot (HD) shares, meanwhile, fell 2.3% in early trading after the home improvement retailer cut its full-year sales forecast following a stronger-than-expected second quarter earnings report.
More Wall Street Analysts:
- Analysts reboot Amazon stock price targets after earnings
- Analyst reboots Rivian stock price target on updated plans
- Analysts reboot Arm Holdings stock price target following earnings
In overseas markets, Europe's Stoxx 600 was marked 0.17% higher in Frankfurt, while Britain's FTSE 100 slipped 0.07% in London.
Overnight in Asia the Nikkei 225 returned from yesterday's Mountain Day holiday and rose 3.45%, erasing all of last week's carry-trade decline. The regional MSCI ex-Japan index rose 0.12% into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
