The Dow Jones Industrial Average and the S&P 500 experienced an uptick on Tuesday as equity markets evaluated the latest producer price report, all while anticipating the impending consumer inflation data. The Dow ascended by 0.5%, settling at 42,518.3, whereas the S&P 500 inched up by 0.1% to reach 5,842.9.
Conversely, the Nasdaq Composite witnessed a slight decline of 0.2%, falling to 19,044.4. Notably, the utilities and financial sectors led the market's gainers, in stark contrast to the declines witnessed in communication services and health care sectors. In economic updates, the Bureau of Labor Statistics disclosed that US producer price growth unexpectedly slowed last month on a sequential basis.
This deceleration can be attributed to stable wholesale service costs, while gains in goods' prices witnessed a cooling effect. Stifel indicated in a note that "a relatively more benign producer price report compared to expectations offers welcome relief for a Federal Reserve that is increasingly concerned about an acceleration in cost pressures." They continued, stating that while the report may not fully quell the likelihood of a policy pivot in the near term, it seemingly provides the Federal Open Market Committee with more operational flexibility, particularly as the data evolves in the forthcoming year and under new policies in Washington. Anticipated government data is set to reveal on Wednesday that the US consumer price index for December has risen 0.4% sequentially and 2.9% year-over-year, according to a survey by Bloomberg. Small business optimism within the US has soared to its highest level since October 2018, with the uncertainty index showing a considerable drop, according to the December survey conducted by the National Federation of Independent Business.
Bill Dunkelberg, the federation's chief economist, remarked that "small business owners feel more certain and hopeful about the economic agenda of the new Trump administration." He highlighted that expectations for economic growth, diminished inflation, and favorable business conditions have surged, fueled by aspirations for pro-business policies and legislation in the new year. As for treasury yields, the US two-year yield dipped by 3.9 basis points to 4.36%, while the 10-year rate lost 2.1 basis points, settling at 4.78%. In the realm of corporate news, United Rentals agreed to acquire H&E Equipment Services for $4.8 billion in cash, signifying the equipment rental company's ambition to enhance its capacity within the US market.
This acquisition prompted a 5.9% surge in United Rentals shares, marking them as the top gainer on the S&P, while H&E Equipment's share price more than doubled. Celanese shares received a boost of 5.4%, securing the position of the second-largest gain on the S&P following an upgrade from BofA Securities to a "buy" rating.
In contrast, Eli Lilly's shares plummeted by 6.6%, marking the most significant decline on the S&P, as the pharmaceutical giant revised downward its Q4 and full-year revenue expectations due to slower-than-anticipated growth in its US incretin division. Meanwhile, Boeing shares decreased by 2.1%, representing the largest drop on the Dow, as the aerospace manufacturer reported that its Q4 and 2024 orders had more than halved compared to the previous year, with deliveries also on the decline. Moreover, oil prices for West Texas Intermediate fell by 1.3%, settling at $77.79 per barrel.
Conversely, gold prices rose by 0.4% to reach $2,690.10 per troy ounce, while silver gained 0.8%, standing at $30.54 per ounce..