Stocks were struggling Friday as Wall Street reacted to faster-than-expected factory gate inflation data and the ongoing rise in domestic COVID infection rates.
The Dow Jones Industrial Average was down 4 points points, or 0.01%, to 34,875, the S&P 500 edged up 0.04%, and Nasdaq rose 0.10%.
August producer prices rose 8.3% from last year, the Labor Department said Friday, a faster-than-expected headline reading that was the largest on record, but largely fueled by supply-chain disruptions linked to coronavirus pandemic.
Brad McMillan, Chief Investment Officer for Commonwealth Financial Network, about today’s PPI numbers.
“Looking at the annual numbers, inflation is clearly getting worse,” Brad McMillan, chief investment officer for Commonwealth Financial Network, said. “But when you look at the monthly numbers, the news is much better.”
While the annual number rose sharply, by half a percentage point, McMillan said, the monthly number dropped sharply.
“This means that looking back we see higher inflation but looking around we see inflation starting to decline,” he said.
McMillan added that “the real takeaway from this report is not that inflation is high – which we already knew – but that the trend is showing signs of turning. And that is a change that we need to watch.”
The COVID hit was also felt in Asia, where Toyota Motor Co. , the world’s biggest carmaker, trimmed its 2022 production forecast by 300,000 vehicles owing to both the ongoing shortage in chip supplies and pandemic-linked factory closures in Vietnam and Malaysia.
Similar concerns have crept into U.S. forecasts, as well, with the Federal Reserve’s August “Beige Book” tallying economic activity citing the impact of COVID at least 54 times, up from just 9 in the month of July.
The data offset a bullish reading from a ninety-minute call between President Joe Biden and China’s Xi Jinping,
This was the second call between the two world leaders but the first in seven months — which was described by the White House as a “broad, strategic” discussion aimed at bridging difference on climate, trade and regional security between the world’s two biggest economies.
Affirm Holdings was the standout gainer, with shares in the “buy now, pay later” payments network soaring after better-than-expected fourth quarter revenues and a robust 2022 outlook.
Freeport-McMoran rose as elevated copper prices offset a downgrade on the stock published Friday by Credit Suisse.
Apple shares tumbled after a judge ruled that the tech giant had violated California competition laws in its dispute with Fortnite maker Epic Games.
General Motors shares were in the green after the carmaker said it expected to be reimbursed for its billion-dollar battery recall and forecast an easing of the bottleneck in global semiconductor supplies.
Oil prices were also active in overnight trading, with WTI futures for October delivery rising 2.27% to $69.69 per barrel, thanks in part to both a bullish read from the Biden/Xi phone call and the ongoing impact of Hurricane on production facilities in the Gulf of Mexico.
This article was originally published by TheStreet.