Stocks Look Beyond Elevated Wholesale Inflation Data

Barry Adams
12 Oct, 2022
New York City

Stocks traded higher despite the elevated wholesale inflation and ahead of the consumer price inflation report on Thursday. 

The producer price index increased 0.4% in September from the previous month and rose 8.5% from a year ago, the Bureau of Labor Statistics reported Wednesday. 

Much of the inflation in the month was driven by 0.4% rise in service costs and travel and accommodation services jumped 6.4%. 

Cost of goods rose 0.4% driven by a 15.7% jump in the index for fresh and dry vegetables. 

The wholesale inflation, excluding food, energy and trade services increased 0.4% from August and jumped 5.6% from a year ago. 

The elevated producer price is likely to provide another reason for the Fed to continue its large-sized rate hike at its next meeting scheduled in three weeks. 

Closely watched consumer price index is scheduled to be released on Thursday. 

The Federal Reserve has raised rates five times in the last six months yet there is no progress on inflation. 

The Fed is widely expected to lift rates by 75 basis points at the next policy meeting ending on November 2. 

The S&P 500 index added 0.3% to 3,598.41 and the Nasdaq Composite increased 0.4% to 10,468.19.  

Crude oil declined $1. 52 to $87.79 a barrel and natural gas rose 4 cents to $6.63 a thermal unit. 

The yield on 2-year Treasury notes advanced to 4.31%, 10-year Treasury notes advanced to 3.96% and 30-year bonds eased to 3.95%. 

 

Stock Movers

PepsiCo, Inc gained 3.8% to $169.0 after the snack and beverage maker reported revenue in the third quarter increased 8% to $21.97 billion and net income rose 22% to $2.7 billion. 

The better-than-expected increase in sales was driven mostly by price increase in snacks business of as much as 20% and 2% decline in volume and flat volumes in its beverage unit and about 4% rise in prices.

El Pollo Loco, Inc increased 14.2% to $10.38 after the company announced a special dividend of $1.50 a share and stock repurchase program of $20 million. 

The special dividend is payable on November 9, 2022 to shareholders of record at the close of business on October 24, 2022.

 

European Markets Extend Losses

European markets traded lower as investors reacted to mixed economic data in the region and corporate news. 

The DAX index fell 0.5% to 12,161.22, the CAC-40 index dropped 0.6% to 5,799.64 and the FTSE 100 index fell 1.1% to 6,811.91. 

The euro declined to 97.01 U.S. cents and the British pound edged down to $1.101. 

The Swiss franc traded down to 99.61 U.S. cents. 

Koninklijke Philips NV dropped 12.3% to