Stocks Rebound After Wholesale Inflation Cooled In March

Barry Adams
13 Apr, 2023
New York City

Stocks looked up on Wall Street after wholesale inflation cooled more than expected in March, a second inflation report confirming the slowing inflation trend. 

The measure of wholesale prices eased in March largely because of a significant decline in energy prices and higher base effect. 

The second inflation report in as many days confirmed that the inflation path is downward but prices are still rising and at faster rates than preferred by the Federal Reserve. 

Moreover, real interest rates are still negative and not restrictive and labor market conditions are still tight, supporting the case for higher interest rates. 

Despite the cooling of inflation, policymakers are likely to lift rates higher by 25 basis points in early May, because stubborn inflation pressures are well anchored in the economy. 

 

March Wholesale Price Index Eased 

The producer price index in March fell 0.5% from the previous month, the U.S. Bureau of Labor Statistics reported Thursday. Core wholesale prices paid by companies decreased 0.1% on a monthly basis after rising 0.2% in February. 

Wholesale prices rose 2.7% on an annual basis in March and core prices, excluding food and energy, increased 3.4%. 

Lower cost of energy and higher base also impacted the overall inflation reading. Two-thirds of the decline can be attributable to 1.0% decrease in final demand for goods, namely gasoline or energy materials. 

 

U.S. Indexes & Yields 

The S&P 500 index increased 0.3% to 4,103.01 and the Nasdaq Composite index added 0.8% to 12,030.04. 

The yield on 2-year Treasury notes decreased to 3.93%, 10-year Treasury notes declined to 3.39% and 30-year Treasury bonds to 3.63%. 

Crude oil edged lower 2 cents to $83.24 a barrel and natural gas futures for immediate month delivery fell 2 cents to $2.06 a thermal unit. 

 

U.S. Stock Movers 

Delta Air Lines, Inc increased 0..2% to $33.87 after the company forecasted June quarter earnings per share between $2.0 and $2.25 and full-year earnings per share between $5.0 and $6.0 and free cash flow of $2.0 billion.  

"With record advance bookings for the summer, we expect June quarter revenue to be 15% to 17% higher on capacity growth of 17% year over year," said Glen Hauenstein, Delta's president.

Delta said March quarter operating revenue rose 36% to $12.8 billion and net loss shrank 61% to $363 million from $940 million and diluted loss per share fell to 57 cents from $1.48 a year ago. 

Delta's strong summer booking lifted United Airlines Holdings by 1.4% and American Airlines Group by 0.6%.   

Infosys Ltd declined 8.2% to %15.69 after the India-based global tech services provider reported weaker-than-expected quarterly results. 

Revenue in the March quarter increased 6.4% to $4.6 billion and net income declined to $744 million from $752 million and diluted earnings per share held at 18 cents. 

For the fiscal year 2023, revenue increased 11.7% to $18.2 billion and net income was stable at $2.9 billion and diluted earnings per share was 71 cents compared to 70 cents a year ago. 

The company guided fiscal year 2024 revenue to rise between 4% and 7% in constant currency and operating margin between 20% and 22%.