Stocks and Treasury Yields Turned Volatile After Producer Price Inflation Rebounded

Barry Adams
14 May, 2024
New York City

Stocks and benchmark indexes turned volatile after the producer price index rose more than expected in April. 

Investors are looking forward to two inflation reports: the producer price inflation report on Tuesday and the consumer price inflation report on Wednesday. 

Factory gate prices rose 0.5%, higher than the monthly increase of 0.3% estimated by the Ticker.com survey. 

The higher-than-expected producer price inflation dashed hopes that the Federal Reserve would lower rates toward the end of the year. 

Investors shifted their attention to the consumer price inflation report on Wednesday, and investors are anticipating monthly inflation to slow to 0.3% from 0.4% in March and the annual pace to ease to 3.6% from 3.8%, respectively. 

Investors also reviewed the latest batch of earnings, including results from Alibaba Group and Home Depot. 

Meme stocks soared after the man behind the "Roaring Kitty" social account, which powered the frenzy to buy stocks that are heavily shorted, posted for the first time in three years. 

 

Producer Prices Advanced in April

Producer price index increased 0.5% in April from the previous month and rose 2.2% from a year ago, the U.S. Bureau of Labor Statistics reported Tuesday. 

Goods costs rose 0.4% after falling 0.2% in March, and service prices increased 0.6% from the previous month, following the downwardly revised 0.1% decline in March. 

Core producer prices on a monthly basis rose 0.5% and advanced 2.4% on an annual basis from the downwardly revised 2.1% in March. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.02% to 5,222.78, and the Nasdaq Composite fell 0.3% to 16,394.49. 

The yield on 2-year Treasury notes edged lower to 4.85%, 10-year Treasury notes inched lower to 4.48%, and 30-year Treasury bonds edged lower to 4.63%.

WTI crude oil increased $0.14 to $79.15 a barrel, and natural gas prices decreased 3 cents to $2.34 a thermal unit.

Gold increased by $5.83 to $2,344.07 an ounce, and silver rose 9 cents to $28.36. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 105.21.

 

U.S. Stock Movers

Home Depot declined 0.9% to $338.0 after the home improvement retailer reported weaker-than-expected results in the first quarter. 

Comparable sales in the first quarter declined by 2.8%, and in the U.S. they fell by 3.2% from a year ago. 

Revenue in the first quarter ending in April declined 2.3% to $36.4 billion from $37.3 billion, net income dropped 7% to $3.6 billion from $3.87 billion, and diluted earnings per share fell to $3.63 from $3.82 a year ago. 

The specialty retailer said fiscal 2024 sales are likely to decrease 1.0%, including the 53rd week, but excluding the recent acquisition of SRS Distribution Inc. 

Home Depot anticipated comparable same-store sales to fall 1% for the 52-week period, but 53-week diluted earnings per share to increase 1.0%. The 53rd week is expected to contribute 30 cents of diluted earnings per share. 

Games Global Limited said it plans to postpone its initial public offering, citing uncertain market conditions, which was previously scheduled for May 14. 

The online casino game supplier was looking to sell 14.5 million shares at a price between $16 and $19 per share. 

Shares of AMC and GameStop shot up in early trading following the resumption of social media postings by "Roaring Kitty." 

GameStop catapulted 130% to $69.67, and AMC Entertainment Holdings soared 123% to $11.81. 

Alibaba Group declined 5% to $80.39 after the China-based online e-commerce platform operator reported higher-than-expected revenue and said net income plunged 86% as the company stepped up investment in artificial intelligence tools.