U.S. Wholesale Prices Rise, industrial Output Flat

Nichole Harper
14 Jun, 2013
New York City

U.S. stocks were little changed and wholesale prices increased more than expected and industrial production was flat in May. Consumer sentiment also declined on the rising energy prices.

[R]11:00 AM New York – U.S. stocks were little changed and wholesale prices increased more than expected and industrial production was flat in May. Consumer sentiment also declined on the rising energy prices.[/R]

Stocks traded flat after producer price index increased more than expected and the industrial production was flat in May.

U.S. producer price index increased 0.5% in May following 0.7% decrease in April, Labor Department said today.

Producer prices increased more than expected in the month, largely on the account of a rebound in energy prices. Excluding volatile food and energy prices, wholesale price increased 0.1% for the second month in a row.

The PPI and the so called core-PPI for the twelve months to May increased 1.7%.

Separately, Federal Reserve said U.S. industrial production unexpectedly was unchanged in May from a revised 0.4% decrease in April.

The decline in utilities output offset the increase in manufacturing and mining activities and Manufacturing production, which accounts for 75% of total production, increased 0.1% after falling 0.4% in the previous month.

Mining output, which included drilling, increased 0.7% and utilities output fell 1.8%.

U.S. consumer sentiment index declined to 82.7 in June from the final read of 84.5 in May, Thomson Reuters and the University of Michigan said today.

European Markets

European markets opened higher and extended gains after the release of U.S. industrial production data.

In London, FTSE 100 index increased 0.5% and in Frankfurt the DAX index added 1%. In Paris trading, the CAC 40 index advanced 0.8%.

Bank of England Deputy Governor Paul Tucker announced his plan to resign after serving the bank for 33 years. Tucker was passed over by Mark Carney, head of Bank of Canada, to lead the central bank in England.

The European Central Bank said today four banks are expected to repay a total of 3.19 billion euros of loans next week. The loans were issued at the height of financial crisis in 2011 as a part of the long term refinancing operation conducted by the central bank.

Asian Markets

Market indexes in Tokyo rebounded from the sharp plunge in yesterday’s trading. Several brokerage firms including Nomura estimated market rebound to a new high in the next two quarters and estimated higher corporate profit and lower yen.

However, corporate Japan is still on the sideline and skeptical of “Kuroda-Abenomics” and the government efforts to revive inflation.

The Bank of Japan’s monetary policy committee said in its minutes of May 22 meeting that the economy has started to expand but few members voiced concerns about the difficult task to meet the 2% inflation target.

The Nikkei 225 Stock Average climbed 1.9% to 12,686.52 and Topix index jumped 1.2% to 1,056.45. In the early hours of trading, the Nikkei soared as much as 3.6%.

For the week, Nikkei 225 slipped 1.5%.

In Mumbai, wholesale inflation declined to a 3-1/2 year low of 4.7% but the recent plunge in rupee is likely to restrain Reserve Bank of India from lowering rare for the fourth time at the next meeting.

Stocks in Review

Edwards Lifesciences ((EW)) declined 1% after the largest maker of heart valves lost a patent infringement case against Medtronic in a German court. Medtronic increased 0.8%.

Groupon ((GRPN)) soared 16% after Deutsche Bank revised its opinion on the stock and recommended investors to buy the stock.

Smith Wesson Holding Corp ((SWHC)) increased 5% after the gunmaker reported in a preliminary filing earnings of 44 cents a share, ahead of 40 cents a share estimated by several analysts.