Wall Street was struck by a sudden shift in sentiment on Friday, driven by a strikingly robust Producer Price Index (PPI) report. The unexpected surge in inflation caught investors off guard, echoing the impact of a similarly strong Consumer Price Index (CPI) earlier in the week.
January 2024 saw a notable 0.3% jump in the PPI, surpassing the anticipated 0.1% surge. At the same time, the year-on-year CPI soared by 3.1%, exceeding the forecasted 2.9%, intensifying the battle against inflation.
“The January inflation data vindicates the Fed’s wait-and-see approach,” noted Bank of America economist Stephen Juneau, reflecting the prevailing market sentiment.
As a result, traders adjusted their expectations for Fed rate cuts, delaying the anticipated start to this summer. Yields surged, with the policy-sensitive two-year note yield climbing by over 10 basis points to reach 4.67%.
Evaluation of Major Indices and ETFs
| Major Indices & ETFs | Price | 1-day % chg |
| S&P 500 | 5,020.44 | -0.2% |
| Dow Jones | 38,675.17 | -0.3% |
| Nasdaq 100 | 17,749.70 | -0.5% |
| Russell 2000 | 2,044.70 | -0.9% |
Amidst the turmoil, the S&P 500 showed minimal change for the day, while the tech-heavy Nasdaq 100 potentially ended a five-week winning streak. Notably, both Microsoft Corp. and Amazon.com Inc. faced a similar trend.
The SPDR S&P 500 ETF Trust was 0.2% lower at $500.96, indicating the cautious mood among investors. The Consumer Staples Select Sector SPDR Fund outperformed, up 0.5%, while the Communication Services Select Sector SPDR Fund was the laggard, falling by 1.4%.
Insights into Major Stock Movers
- Bio-Rad Laboratories Inc. rose over 7%, marking the largest single-day rise among S&P 500 stocks after the release of stronger-than-expected results last quarter.
- Digital Realty Corp. Inc. fell 7.6% after fourth-quarter results missed projections, signaling market volatility.
- Other companies reacting to earnings included Applied Materials Inc., up 7%, and a mix of companies such as Vulcan Materials Company, The Trade Desk Inc., Coinbase Global Inc., Toast Inc., ShockWave Medical Inc., Roku Inc., Dropbox Inc, and DoorDash Inc., experiencing notable shifts in stock prices.
The market gyrations have left investors scrambling to make sense of the day’s events, as tech stocks bear the brunt of the PPI and yield surge. As tension looms over the Federal Reserve’s impending decisions, the market is in a state of flux, testing the resilience of major indices and individual equities.
The market’s reaction is akin to a rollercoaster ride, with unexpected twists and turns leaving both traders and analysts on edge.