Dow Drops 200 Points After July’s Wholesale Inflation is Much Hotter Than Expected
Stocks slipped on Thursday after a new inflation report showed that wholesale costs rose more than expected last month
The Dow Jones Industrial Average lost 200 points, or about 0.5%. The S&P 500 shed 0.4%, while the Nasdaq Composite slid 0.3%.
Investors came into the session riding high, with the S&P 500 and Nasdaq posting fresh record highs in the previous session. The benchmarks got a jolt earlier this week after the release of a cooler-than-expected consumer price inflation report for July. That report stoked hopes among investors for a rate cut from the Federal Reserve at the end of its September policy meeting.
However, investors were left feeling disappointed after July’s producer price index reading indicated that such a rate cut is far from guaranteed. Wholesale prices rose 0.9% on the month, much more than the 0.2% economists polled by Dow Jones were expecting. The index had come in flat in June. Wholesale prices can be a leading indicator for consumer prices.
Some traders were looking past this PPI number because the report showed the increase was driven by a large gain in “portfolio management,” along with airfare. Without those factors the figures would have been much closer to estimates.
Source : CNBC
