On Tuesday, U.S. benchmark equity indexes experienced a significant upswing, bolstered by a report indicating that producer prices for July rose less than anticipated. The financial markets are now keenly awaiting the official consumer inflation data scheduled for release on Wednesday. The Nasdaq Composite surged by 2.4%, closing at 17,187.6 points, while the S&P 500 registered a 1.7% increase, reaching 5,434.4 points.
The Dow Jones Industrial Average also advanced, albeit to a lesser extent, with a gain of 1% to a total of 39,765.6 points. Notably, the technology and consumer discretionary sectors led the charge among the gainers, whereas the energy sector was the only major segment to register a decline. In a detailed economic report released by the Bureau of Labor Statistics, the U.S.
producer price index (PPI) recorded a modest rise of 0.1% month-over-month in July, adjusted for seasonal variations. This figure fell below market expectations, which had anticipated a 0.2% increase. Furthermore, the annual PPI growth stood at 2.2%, lower than analysts’ predictions of a 2.3% increase. Stifel, a well-respected financial services firm, remarked, "A cooler-than-expected PPI report offers welcome support for those in favor of a near-term rate reduction.
However, the inconsistency across various underlying components—particularly with an uptick in prices excluding food, energy, and trade services—intensifies the focus on tomorrow's consumer price index (CPI) release, which will be critical in assessing trends in price pressures." Market expectations suggest that the U.S.
CPI is likely to have registered a 0.2% increase on a sequential basis and a 3% increase year-over-year in July, based on data compiled by Bloomberg. Concurrently, the optimism among small businesses in the U.S. saw a rise last month, reaching its highest level since February 2022. Despite this positive sentiment, inflation remains the primary concern for business owners, as indicated by the latest survey from the National Federation of Independent Business. TD, a leading financial group, noted, "While overall sentiment is on the upswing, the combination of rising inflation worries is causing small business owners to exercise caution for the time being." In bond market developments, the yield on the U.S.
two-year notes fell by 7.5 basis points to settle at 3.94%. Meanwhile, the yield on the ten-year notes experienced a decrease of 5.7 basis points, reaching 3.85%. In corporate news, Starbucks has made headlines by recruiting Chipotle Mexican Grill’s Chief Executive, Brian Niccol, who is set to take the helm at Starbucks next month.
Following this announcement, Starbucks shares surged nearly 25%, marking the highest gain on both the S&P 500 and Nasdaq, while Chipotle shares experienced a decline of 7.5%, making it the steepest drop within the S&P 500. Additionally, Baxter International has struck a deal to sell its kidney care segment to Carlyle Group for a whopping $3.8 billion.
Following this announcement, Baxter's stock plummeted by 6.6%, ranking as the second-worst performer in the S&P 500, whereas Carlyle saw an uptick of 2.4%. Moreover, Tencent Music Entertainment faced a decline in its second-quarter revenue compared to the previous year, primarily driven by reduced earnings in its social entertainment services segment.
This loss was somewhat mitigated by gains in its online music unit, but still led to a 15% drop in the value of the company's American depositary receipts. Turning to commodities, West Texas Intermediate crude oil prices fell by 1.9%, settling at $78.51 per barrel. Analysts from D.A. Davidson highlighted, "Oil prices have decreased as market participants recalibrate their concerns regarding demand following the Organization of the Petroleum Exporting Countries’ (OPEC) recent adjustments to its demand growth forecast for 2024, largely attributable to subdued expectations from China." In precious metals, gold saw a slight increase of 0.1%, trading at $2,506.90 per troy ounce, while silver experienced a minor decline of 0.3%, settling at $27.92 per ounce..