Wall Street’s main indices were set for modest gains as investors analyzed recent producer price data amid potential peace talks between Russia and Ukraine. The producer price index rose 0.4% last month, surpassing expectations. Unemployment claims fell slightly, while inflation indicators suggested the Federal Reserve may be cautious about interest rate cuts. In the stock market, Tesla saw gains, while Trade Desk and Reddit experienced significant declines. Cisco and Robinhood posted strong performances, contrasting with Deere’s revenue drop.
Wall Street Indices Anticipate Slight Gains
On Thursday, the primary indices on Wall Street were poised to open with modest increases, as investors digested the latest producer price data. The potential for peace negotiations between Russia and Ukraine has also encouraged a bit of risk-taking among market participants. According to the Labor Department’s Bureau of Labor Statistics, the producer price index (PPI) for final demand increased by 0.4% last month, following a revised rise of 0.5% in December. Economists who were surveyed had predicted a 0.3% uptick in the PPI. Over the past year leading up to January, the PPI has experienced a 3.5% increase, slightly up from 3.3% in December.
Kim Forrest, the chief investment officer at Bokeh Capital Partners, noted, “The revisions indicated higher inflation in the past, making today’s high and unexpected inflation figure seem low in comparison.” Concurrently, yields on government bonds declined after the data was released, with the 10-year bond yield settling at 4.56%. Prior to the announcement, futures traders had assigned nearly a 60% chance that the Federal Reserve would keep interest rates steady in July, although this probability dipped to approximately 52% following the data’s publication.
Unemployment Claims and Inflation Insights
Additional data revealed that the number of Americans filing new unemployment claims was 213,000 for the week ending February 8, which was slightly lower than the estimated 215,000, according to economists. Furthermore, the consumer price index (CPI) for January indicated the most significant price increase in nearly a year and a half, reinforcing the Federal Reserve’s stance that it is not rushing to cut interest rates. The recent figures from the personal consumption expenditures price index, which is favored by the Fed, also showed the fastest rise in months. This consistent evidence of increasing inflation suggests that central bank policymakers might exercise caution regarding interest rate reductions this year.
In political news, former President Trump mentioned that both Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy have expressed a desire for peace during separate phone calls he held with them on Wednesday. He also hinted at the announcement of tariffs at 1 p.m. ET. As of 8:53 a.m. ET, Dow E-minis were up by 79 points (0.18%), S&P 500 E-minis gained 7.25 points (0.12%), and Nasdaq 100 E-minis rose by 53.75 points (0.25%). In the stock market, mega-cap stocks showed mixed results, with Tesla leading the charge with a 3.1% increase. Meanwhile, Trade Desk saw a substantial drop of 29.8% after forecasting first-quarter revenue below analyst expectations. Reddit experienced a 7.4% decline after missing market estimates for daily active unique visitors in the fourth quarter. On the other hand, Cisco Systems rose by 5.9% after increasing its annual revenue forecast, while Robinhood Markets surged by 12.2% after surpassing fourth-quarter earnings expectations. Deere, however, fell by 5% after reporting a 35% decline in quarterly revenue and failing to meet analysts’ expectations.