US benchmark equity indexes demonstrated a notable upward trend during intraday trading, spurred by the release of official data indicating that producer prices saw an increase slower than anticipated in July. The Nasdaq Composite surged by 2.2%, reaching 17,151.1 points by midday on Tuesday, while the S&P 500 observed a gain of 1.4%, climbing to 5,417.3.
The Dow Jones Industrial Average also saw a positive movement, with an increase of 0.8% to 39,359.9. In examining sector performance, technology and consumer discretionary sectors emerged as the frontrunners, showcasing significant gains, while energy stood out as the sole decliner amidst this upward trend. Delving into the economic data, the US producer price index (PPI) experienced a modest rise of 0.1% month-over-month in July, adjusted seasonally.
This figure falls short of the consensus projected by Bloomberg, which was anticipating a 0.2% increase. Annually, the PPI increased by 2.2%, which is slightly lower than the 2.3% projection from analysts, indicating a potential cooling in price pressures. Stifel highlighted in a note to clients that the cooler-than-expected PPI report provides a supportive backdrop for advocates of a near-term interest rate reduction, although it cautioned that inconsistencies in the underlying components, specifically an uptick in prices excluding food, energy, and trade services, heighten the anticipation for tomorrow's consumer price index (CPI) release, which is critical for assessing ongoing price trends. Looking forward, the CPI is forecasted to have risen by 0.2% from the previous month and by 3% from the same time last year, according to a consensus compiled by Bloomberg. In a separate economic indicator, the latest survey from the National Federation of Independent Business revealed an increase in small business optimism within the US, marking the highest level recorded since February 2022; however, inflation remains a predominant concern among business owners.
TD noted that despite the uptick in overall sentiment, small business owners continue to exercise caution in their outlook. In terms of yield movements, the US 10-year treasury yield experienced a decline of 5.3 basis points to settle at 3.86%, while the two-year rate dropped by 6.1 basis points to reach 3.95%. On the corporate front, significant news emerged from Starbucks ($SBUX), which announced the recruitment of Chipotle Mexican Grill ($CMG) Chief Executive Brian Niccol to assume the leadership role at the coffee giant in the upcoming month.
This announcement propelled Starbucks shares, which surged by 21%, making it the leading gainer on both the S&P 500 and the Nasdaq. In contrast, Chipotle's shares experienced a decline of 7.4%, marking the steepest drop on the S&P 500. In additional corporate news, Baxter International ($BAX) has completed the sale of its kidney care segment to private equity firm Carlyle Group ($CG) for $3.8 billion.
Following this transaction, Baxter's shares fell by 6.1%, making it the second-worst performer on the S&P 500, whereas Carlyle shares rose by 1.8%. In the entertainment sector, Tencent Music Entertainment's ($TME) second-quarter top-line revenue exhibited a year-on-year decline primarily due to reduced earnings from its social entertainment services segment, despite gains in its online music unit.
The company's American depositary receipts saw a downturn of 15%. Lastly, in commodities trading, West Texas Intermediate crude oil prices saw a decrease of 2.1%, priced at $78.40 per barrel intra-day. Gold showed a minor increase of 0.1%, reaching $2,507.20 per troy ounce, while silver faced a decline of 0.9%, settling at $27.77 per ounce..