Stocks were inching higher as producer prices rose at a slower-than-expected pace in December.
Inflation—and the Federal Reserve’s need to rein it in—has been the driving force in the market recently, particularly after December’s consumer-price index hit its highest level since 1982.
In that respect, December’s producer-price index, released Thursday morning, has helped alleviate some of the concerns. It rose just 0.2% in December from November, below forecasts for a 0.4% increase, a sign that the pace of inflation might be slowing. Producer prices often lead consumer prices.
The market had already brushed off Wednesday’s CPI. Stocks rose slightly on the back of yesterday’s data as markets saw the upside. Inflation is seen nearing its peak—and investors were worried about a much higher print—and signs of slowing inflation are a moderating force on hawkishness from the Fed. Thursday’s PPI could have a similar impact.
“Yesterday’s market reaction could raise the hope that perhaps global inflationary pressures might be starting to diminish,” said Michael Hewson, an analyst at broker CMC Markets.
“This seems a little premature on the basis of one month’s numbers, however this afternoon’s U.S. PPI could add an extra quiver to that argument if we see a similar trend in today’s December numbers,” he added. “PPI has tended to be a leading indicator for headline CPI for most of last year, and is already well above CPI levels.”
The Fed’s Lael Brainard will testify before the Senate at her nomination hearing as the next vice chair of the central bank, and investors will be listening for clues about the central bank’s response to inflation. Brainard said Wednesday that inflation was “too high” and that lowering it would be a priority.
Indications from the Fed have shown the central bank on track for earlier, faster interest-rate increases, with markets pricing in three rate increases this year and the first in March. Tighter policy ahead, and an upbeat tone from the Fed on the strength of the U.S. economy, have seen bond yields rise, pressuring stocks. The 10-year, at least, has pared recent gains and is up just 0.009 percentage points to 1.734% Thursday morning.
In the commodity space, crude prices continued their steady upward march, with futures contracts for international oil benchmark Brent up 0.2% to almost $85 a barrel. U.S. futures for West Texas Intermediate crude were similarly higher to near $83.
Cryptocurrencies were inching higher again Thursday, with Bitcoin —the leading crypto—up 2.5% over the last 24 hours, according to data from CoinDesk. Smaller peer Ether rose 3.5%, approaching $3,400.
Here are five stocks on the move Thursday:
Chip group Taiwan Semiconductor Manufacturing Co. (ticker: TSM) rose 4.8% in the New York premarket after posting strong quarterly results. The world’s largest contract semiconductor manufacturer saw a 16.4% jump in net profit on a 21.2% spike in sales amid strong demand and tight supply.
Moderna (MRNA has declined 0.8% after announcing that the data from its vaccine trial in two- to five-year olds would be reported in March.
Boeing (BA) has risen 2.12% on reports China could reinstate the 737 Max sometime this month.
Write to Jack Denton at firstname.lastname@example.org