- Market sentiment remains negative as lower US PPI pushed S&P500 valuations to the higher side.
- Firms have been forced to lower their bid prices to match weaker demand.
- A downward revision to inflation projections inspired by the US PPI sent US Treasury yields to a multi-month low.
Heavy selling by market participants in the United States stocks after a weak USA Producer Price Index The December report (PPI) and monthly retail sales on Wednesday were carried over to Thursday morning. S&P500 futures faced heat as firms were forced to cut prices of goods and services at their factory gates to keep pace with falling retail demand.
At press time, S&P500 futures showed modest losses and fell further to near 3,925.00, indicating a deep bearishness among investors. willingness to take risks.
Overall US PPI fell to 6.2% versus consensus of 6.8% on an annual basis. And core PPI, which excludes oil and food prices, was cut to 5.5% from expectations of 5.9%. In addition, monthly retail sales fell sharply by 1.1% versus estimates of -0.8%. As manufacturers were forced to cut prices to maintain overall sales, valuations of various firms moved to the higher side in the middle of the earnings season, forcing investors to abandon US stocks. This could also force manufacturers to scale back their supply going forward, which could trigger a slowdown due to a decline in manufacturing activity.
Lower-than-expected US PPI report inspires further decline in inflation projections. This supported the case for a slowdown in interest in hiking rates The Federal Reserve (Fed) on the monetary policy talks ahead.
Reuters reports that Philadelphia Fed President Patrick Harker reiterated on Wednesday that he is ready for the U.S. central bank to raise interest rates by 25 basis points, amid signs that hot inflation is cooling.