U.S. stocks rose across the board on Tuesday as investors took note of the first of two major inflation reports this week, which showed prices rose less than expected in December. There was also focus on a report that the new Trump administration could raise tariffs more gradually to ease inflationary pressures.
The benchmark S&P 500 (^GSPC) rose about 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) rose 0.6%, both poised to rebound after Monday’s losses. Meanwhile, the Dow Jones Industrial Average (^DJI) added 0.4% on the heels of a winning day for the blue-chip index.
The producer price index, which tracks price changes observed by companies at the wholesale level, rose 3.3% from last year, up from 3% in November, but less than what economists predicted. It increased by 0.2% compared to the previous month, also less than expected. The report lays the groundwork for Wednesday’s highly anticipated consumer inflation figure.
Meanwhile, President-elect Donald Trump’s team plans to roll out promised tariff increases month by month rather than imposing higher levels all at once, Bloomberg reported, in an effort to help to prevent inflation peaks.
The likelihood that Trump’s policies will increase price pressures worries markets because it could limit the Federal Reserve’s room to cut interest rates. But graduated tariffs could still be “problematic” for the central bank’s efforts to complete its job of slowing inflation, a UBS strategist said.
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After the tariff report, the dollar (DX-Y.NYB) retreated after a five-day winning streak, while the 10-year Treasury yield (^TNX) retreated from highs in 14 months reached during Monday’s bond sale.
On the corporate side, shares of KB Home (KBH) jumped more than 10% in early trading after the homebuilder’s fourth-quarter profits topped estimates.
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Stocks open higher
Stocks are in recovery mode after the latest inflation data showed prices rose less than expected last month, while investors also digested a new report that the Trump administration could increase tariffs more gradually as part of the fight against inflation.
The benchmark S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) each rose about 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) climbed ‘around 0.6%.
DJI – Free real-time quote • USD
At 9:58:57 a.m. EST. Open market.
PPI shows wholesale inflation rose less than expected in December
Wholesale prices rose less than expected in December, a positive sign for the economy amid recent market fears that inflation would not fall as quickly as hoped to reach the 2% target. Federal Reserve.
Tuesday’s report from Bureau of Labor Statistics showed that its Producer Price Index (PPI) – which tracks price changes seen by businesses – rose 3.3% from a year earlier, up from 3% seen in November , but below the 3.5% increase predicted by economists. On a monthly basis, prices rose 0.2%, below the 0.4% increase economists expected.
Excluding food and energy, “core” prices increased by 3.5% year-on-year, higher than the 3.4% increase recorded in November. Economists expected an increase of 3.8%. Meanwhile, month-over-month core prices remained unchanged, below the 0.3% increase economists expected and the 0.2% increase seen last month.
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Goldman Sachs estimates the economic impact of wildfires
The Goldman Sachs team said in a note this morning that combined property losses from the Eaton and Palisades fires are on track to surpass the most destructive wildfire (the 2018 Camp Fire) in the history of California.
Insured losses are estimated between $10 billion and $30 billion, Goldman estimates.
Here are the company’s estimates of the short-term economic impact:
