US equities close higher as softer PPI boosts market sentiment

Wall Street had a good day, and for once the reason was refreshingly simple: prices aren’t rising as fast as everyone feared. US equities climbed on August 13 after the Bureau of Labor Statistics reported that July’s Producer Price Index came in softer than expected. The S&P 500 rose roughly 0.5% to 0.7%, touching an intraday record near 7,817, while the Nasdaq Composite outperformed with gains of approximately 0.8% to 1.0%. Technology and communication services led the charge. The inflation picture is finally cooperating The July PPI reading was flat month-over-month and up 4.7% year-over-year. Economists had penciled in a 4.9% annual increase, and June’s reading had come in at a considerably hotter 5.5%. The PPI data landed one day after the July Consumer Price Index told a similar story. The CPI registered a 3.4% yearly increase, while core inflation, which strips out food and energy, settled at 2.5%, ticking down from 2.6% the prior month. For traders, the takeaway was immediate: the Federal Reserve is almost certainly going to sit on its hands at the September 15-16 FOMC meeting. The CME FedWatch Tool reflected the shift, with increased bets on no rate change following the...