Market Slides as August PPI and Oil Prices Revive Fed Rate-Hike Concerns

U.S. equities closed lower on Thursday, with the S&P 500 slipping 0.58 % to 7,591.75, the Dow down 0.60 % to 52,064.10, and the Nasdaq falling 0.65 % to 26,081.73. Heavyweights in the semiconductor sector led the decline—Nvidia lost 2.3 % and Micron Technology fell 4.7 %—while Apple rose 3.6 % after unveiling a $1,999 iPhone. Nine of the eleven S&P 500 sector indexes fell, led by materials (-1.45 %) and information technology (-0.91 %).

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The August Producer Price Index rose 0.4 % month-over-month, matching the consensus forecast and reversing a 0.1 % decline in June. The increase was driven largely by higher energy-product costs. At the same time, Brent crude surged to $107-$108 a barrel and WTI topped $100, reflecting heightened geopolitical tension after U.S.–Iran clashes in the Strait of Hormuz and attacks on shipping in the Gulf of Oman.

Wall Street slides as investors digest PPI report

• August PPI: +0.4 % MoM (consensus +0.4 %).

Wall Street slides as investors digest PPI report

• Treasury yields: 2-year at 4.56 % (up 13 bps), 10-year near 4.95 %, 30-year at 5.36 %.

U.S. equities closed in the red as Wall Street received the latest inflation data

• Brent crude: $107-$108 per barrel; WTI: $100.88 per barrel.

Wall Street Opens Lower as Markets Digest PPI Data

• Sector performance: consumer staples and healthcare posted gains; all other sectors declined.

Wall Street Opens Lower as Markets Digest PPI Data

Ross Mayfield of Baird said short-end yields reflect expectations of a near-term Fed hike, while long-end yields are pressured by debt, deficit issues, and persistent inflation. Prashant Newnaha of TD Securities warned the bond market is under pressure from oil-driven inflation fears and that agricultural commodities could lift food’s CPI contribution.

Reuters

• The CME FedWatch tool placed the probability of a Fed rate increase at 70 % after the PPI release, while Reuters-cited analysts estimated the odds at about 60 %.

U.S. equities closed in the red as Wall Street received the latest inflation data

• Two-year Treasury yield figures differ slightly: 4.49 % in a finimize commentary versus 4.56 % reported by TradingView.

U.S. equities closed in the red as Wall Street received the latest inflation data

• “Yields are going up at the short end of the curve because the Fed is probably going to hike in the next couple months. Yields are going up at the long end of the curve because of debt and deficit issues, and sticky inflation,” — Ross Mayfield, Baird

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Investors now await the August consumer price index report due on Friday, which will be a key determinant of the Federal Reserve’s policy outlook. The Fed’s monetary-policy meeting is scheduled for September 15-16, and market participants expect the decision to hinge on whether the CPI confirms the inflationary trend signaled by the PPI and oil prices.

Reuters