Breaking News
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% Upgrade now

Wall Street Rallies On Falling PPI

By David MaddenMarket OverviewAug 11, 2022 17:50
Wall Street Rallies On Falling PPI
By David Madden   |  Aug 11, 2022 17:50
Saved. See Saved Items.
This article has already been saved in your Saved Items

The fall in US producer price index (PPI) triggered a fresh round of buying on Wall Street and the S&P 500 has set a new three-month high. The PPI reading cooled to 9.8%, from 11.3%, and it missed the 10.4% forecast. The sizeable fall in PPI indicates the inflationary pressure is easing, and that led to chatter the Federal Reserve might look to dial down its aggressive hiking cycle. PPI measures costs at the factory level, and if they are falling that could pave the way for lower prices for the end consumer. As we saw yesterday, US CPI fell to 8.5%, and considering today’s PPI update, we might see CPI fall further in the months ahead. There was some cause for concern in today’s US economic update as the core PPI reading dropped to 7.6% from 8.2%. The core report strips out commodity prices, and it paints a clearer picture of true demand, and the fact the core PPI reading dropped could be a sign that underlying demand is waning. This is a slight worry because the US economy is in a technical recession, and it is possible the economy might slip into an actual recession. US stocks are up even though bond yields are higher, it seems strange the US 10-year yield has ticked up to 2.83% given the PPI reports. Stock markets in Europe were less eventful and they had a mixed session.  

It has been another difficult day for the greenback as the headline PPI indicates that prices are beginning to cool, and the drop in core PPI speaks to dwindling demand. The sell-off in the US dollar is assisting EUR/USD, and the currency pair is not too far away from yesterday’s one-month high. A break above that peak could pave the way pave for 1.0450 to be tested. AUD/USD is powering ahead, firstly because of the weak US dollar, and secondly, the broad rally in industrial metals like copper is boosting the Australian dollar. 

WTI and Brent crude are both up over 2% as the IEA raised its 2022 demand forecast by 380,000 barrels per day. The positive news was a welcome change as this week’s EIA and API data showed major increases in US oil stockpiles, which can be a sign of weak demand. Despite the fall in the US dollar, gold is in negative territory as the bullish move in US equities is impacting demand for lower-risk assets.


Wall Street Rallies On Falling PPI

Related Articles

ING Economic and Financial Analysis
Rates Spark: Pivot Alert By ING Economic and Financial Analysis - Oct 04, 2022

Markets are smelling blood in the water, but do they have enough evidence to price a policy turnaround? Not yet in our view. The BoE’s reluctance to buy gilts is a sign that...

What's next for the UK economy? By FocusEconomics - Oct 04, 2022

The UK has been buffered in recent days by a tumbling pound and spiking bond yields. In our latest insight piece, we look at what is in store for the British economy. On 23...

Wall Street Rallies On Falling PPI

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email