As U.S. inflation kicks in, stock rally hits the wall: market packaging

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As U.S. inflation kicks in, stock rally hits the wall: market packaging

Rita Nazareth

((Bloomberg) – As inflation raises bond yields and the dollar collects, stock bubbles hit a wall, while traders’ bond bets will lower Fed interest rates next month.

After about 30% of the April low, the S&P 500 has little. While the index’s move has become milder due to the gains of most large technicians, its approximately 400 shares have fallen. The yield in the two-year period was 7 basis points to 3.74%. The currency market shows that the Fed will cut interest rates by about 85% in September after fully priced a day ago.

In three years, U.S. wholesale inflation accelerated the most in July, indicating that companies are passing higher import costs associated with tariffs. The producer’s price index rose 0.9% from a year ago and 3.3% from the same period last year. Service costs rose 1.1% last month.

With consumer price data earlier this week noting that July’s passes were milder and now the labor market has moved to lower equipment, Fed officials are expected to lower interest rates next month. However, company wholesale inflation data may cause some officials to stop as prices are recovering.

For Chris Zaccarelli of Northlight Asset Management, the spike in the PPI shows that even if consumers are not feeling inflation, even if the economy is not yet economic.

“Given how benign the CPI figures were on Tuesday, this is the least welcome surprise and will likely give up the optimism of ‘guaranteed’ lower tax rates next month,” he said.

“The PPI is stronger than expected, and the relatively soft CPI shows that businesses are eating a lot of tariff costs rather than passing it on to consumers,” said Clark Geranen of Calbay Investments.

According to City Index and Forex.com’s Fawad Razaqzada, this could impact earnings for the company in the third and fourth quarters as input costs rise. However, the disadvantages are limited, which suggests that investors are not too worried yet.

“With the one-time increase and their concerns about the job market, it is likely that the Fed will see this rise from September,” he said.

Gina Bolvin, president of Bolvin Wealth Management Group, said PPI growth reflects lingering cost pressures (some driven by tariffs), but core inflation trends still include.

“It’s a reminder that the pathways to slow down rates may not be linear, but the broader dissolution trend remains intact,” she said. “It’s not a sign of panic. It’s time to focus on fundamentals, stay diversified and look for companies with strong pricing power and healthy profit margins.”

“This isn’t a gateway to cut the tax rate cut in September, but the opening may be a little smaller than a few days ago, according to the initial reaction from the market.”

Thierry Wizman of Macquarie Group said traders are softer about what they might achieve in the coming weeks.

“The Fed is more likely to bring us hawkish cuts than torture,” he noted. In September, he said, there was no fundamental change in the data or the direction of the market until then.

In the BMO capital market, Ian Lyngen said nothing in the details can substantially change investors’ understanding of the real economy or the Fed.

Meanwhile, Treasury Secretary Scott Bessent said he did not call for a series of interest rate cuts from the Fed, but pointed out that the model shows that “neutral” interest rates will be reduced by about 1.5 percentage points.

“I didn’t tell the Fed what to do,” Bessent told Fox Business, referring to his comments on the central bank’s “how to cut tax rates here.”

Federal Government St. Louis President Alberto Musalem told CNBC that it is too early to decide whether to lower interest rates at next month’s meeting.

Separate data on Thursday showed that claims for unemployed people last week were lower, suggesting that employers are still reluctant to fire workers.

From here, analysts and investors are preparing to search for Friday’s retail sales report to see how American households feel about the economy.

Company Highlights:

Cisco Systems Inc. has made cautious predictions for the current fiscal year, even as sales of AI projects begin to contribute.
Apple Inc. is restoring blood oxygen tracking capabilities for American smartwatches after years of legal struggles.
Peloton Interactive Inc. plans to upgrade its largest product upgrade over the years, which is restored to sales by refreshing hardware, new accessories and artificial intelligence.
Deere & Co, the world’s largest manufacturer of agricultural machinery. Cut the full-year earnings outlook amid lower cereal prices curb farmers’ spending.
Eli Lilly & Co. Its price tag for obesity in the UK is being raised by as much as 170% as the pharmaceutical industry is under pressure from U.S. President Donald Trump to raise drug prices in Europe and lower sales for Americans.
JD.com Inc.’s revenue grew 22% faster than expected, benefiting from government-guided consumer subsidies, and new areas such as aggressive but expensive drives such as delivery.
Costco Wholesale Corp. has decided not to allocate abortion drug mifescin to its more than 500 pharmacy locations, a decision urged by a group of faith-based activists who urge retailers to avoid selling the drug.
Rogers Communications Inc. will sell a portfolio of nine data centers to infrastructure manager infrastructure capital partners to help repay debt.
Tapestry Inc. has been one of the retail stars, but its Kate Spade brand’s mix of tariff costs and weaknesses has sent investors away on Thursday.
Carlsberg A/S reported a decline in numbers and warned consumers to continue to retreat.
Klarna Group Plc must set aside more money in the second quarter to potentially create sour loans in the second quarter, a move that puts pressure on the results ahead of its expected public debut.
Han Hai Precision Industry Company expects server sales to more than double this quarter, while its consumer electronics business has declined, highlighting how it relies on the AI boom to offset volatile iPhone sales.