US Stocks Plummet as Hot PPI Data and Rising Oil Prices Fuel Inflation Fears
The US stock market experienced significant losses on Thursday following hotter-than-expected producer price inflation data. The Dow Jones fell further as oil prices continued to rise above $100 a barrel, exacerbating inflation concerns and pushing expectations for a September rate hike up to 70%. The S&P 500 futures rose 0.55%, while the Nasdaq futures declined by -1%.
The hotter-than-expected PPI data showed a 5.4% year-on-year increase in August, beating estimates of 5.3%. Core PPI, which excludes volatile items like food and fuel, also rose to 4.6%, up from 4.3%. This suggests that underlying price trends are increasing.
The Federal Reserve may need to maintain higher interest rates or raise them further due to the rising cost pressures in the economy. Expectations for a September rate hike have increased to 70% following the data release. Investors are awaiting tomorrow's CPI data, which could further lift rate hike expectations and Treasury yields if it shows hotter-than-expected inflation.
Meta Platforms rose 1.4% after an upgrade by JPMorgan, while Apple gained 1% after unveiling its foldable iPhone and other products. However, investor response was muted on Wednesday. Copper miners declined alongside the price of copper due to concerns over tariffs.