World stock index set for record high, dollar dips after PPI, Powell

Everything was humming along relatively flat until about 1:30, the lack of enthusiasm attributed to a hotter than expected PPI report. It must have been at 1:30 that Powell made his remarks opining that even though the PPI was bad inflation news, prior data had also been revised lower so, taken together, the consensus was “mixed,” not “hot.” That triggered a buying spree closing the Dow and Nasdaq out at low 3-digit gains. But the big report comes Wednesday with the CPI. Volume came in at 13.9 billion, not just above average for a change, but considerably above average. If the CPI report is pleasing, volume should go through the roof Wednesday. 

World stock index set for record high, dollar dips after PPI, Powell

By Caroline Valetkevitch

Tue May 14, 2024 5:09 PM

DJ: 39,431.51  -81.33        NAS: 16,388.24  +47.37       S&P: 5,221.42  -1.26        5/13

DJ: 39,558.11  +126.60     NAS: 16,511.18  +122.94     S&P: 5,246.68  +25.26     5/14

NEW YORK, May 14 (Reuters) - MSCI's gauge of stocks across the globe was set for a record high close on Tuesday, while the U.S. dollar edged lower as investors digested U.S. producer prices data and comments from Federal Reserve Chair Jerome Powell.  Major U.S. stock indexes also climbed, with the Nasdaq posting a closing all-time high.  Data showed U.S. producer prices rose more than expected in April amid strong gains in the costs of services and goods, indicating that inflation remained elevated early in the second quarter.  Powell, speaking at a banking event in Amsterdam, said the latest report on U.S. producer prices was more "mixed" than "hot" given that prior data was revised lower even as the figures for April came in higher than expected.  The key data of the week, though, will be Wednesday's U.S. consumer prices report.

Investors have been watching inflation data closely as they weigh how soon the Fed might lower interest rates.  Higher-than-anticipated consumer prices in the first quarter of the year raised concerns that the Fed will be unable to cut rates this year unless there is a significant uptick in the unemployment rate.

The Dow Jones Industrial Average (.DJI), opens new tab rose 126.60 points, or 0.32%, to 39,558.11, and the S&P 500 (.SPX), opens new tab gained 25.26 points, or 0.48%, to 5,246.68. The Nasdaq Composite (.IXIC), opens new tab gained 122.94 points, or 0.75%, to 16,511.18, surpassing its prior peak set on April 1.  MSCI's gauge of stocks across the globe (.MIWD00000PUS), opens new tab rose 3.07 points, or 0.39%, to 785.90, and earlier hit an intraday record. The STOXX 600 (.STOXX), opens new tab index rose 0.15%.

The dollar edged lower following the PPI data.  "Sticky inflation looked downright stuck this morning after a much hotter-than-expected inflation reading. But with last month's numbers revised lower, this report may not have been as much of an upside shock as it first appeared to be," said Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley.

The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.17% to 105.01, with the euro up 0.26% at $1.0816.  Against the Japanese yen , the dollar strengthened 0.16% to 156.45.  Benchmark 10-year Treasury yields briefly hit an 11-day high after the PPI data and then they retraced.  The yield on benchmark U.S. 10-year notes fell 3.2 basis points to 4.449%, from 4.481% late on Monday.

U.S. President Joe Biden on Tuesday unveiled a bundle of steep tariff increases on an array of Chinese imports including electric vehicles, computer chips and medical products.  The announcement came after market close in China, but U.S.-listed shares of Chinese EV makers including Li Auto were down 2.2%.

Brent crude futures fell 98 cents, or 1.18%, to settle at $82.38 a barrel. U.S. West Texas Intermediate crude futures (WTI) fell $1.10, or 1.39%, to settle at $78.02 a barrel.  Spot gold added 0.89% to $2,356.95 an ounce. 

Per the CBOE, volume came in at 13.9 billion, not only above average for a change but considerably above average.  If the CPI numbers are pleasing, volume should go through the roof Wednesday.