The S&P 500 Index ($SPX) (SPY) is up +0.57%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.22%. September E-mini S&P futures (ESU26) are up +0.58%, and September E-mini Nasdaq futures (NQU26) are up +1.22%. Stocks are seeing support as today's favorable PPI report caused a -7 bp decline in the 10-year T-note yield and a drop in expectations for a Fed rate hike to 35% from 40% on Wednesday.
Stocks are also seeing support from today's drop of more than -1% in crude oil prices, amid a lack of reports of fresh US or Iranian attacks in the Persian Gulf. A $20 Billion Reason Why Intel Stock Is in Focus Mark Cuban Says If You Win The Lottery, Don't Take The Lump Sum — And Tell People Who Ask for Money No, But 'Be Nice. No One Likes a Mean Billionaire' Ahead of Applied Materials Earnings, Here's What Barchart Data Says Comes Next for AMAT Stock Get exclusive insights with the FREE Barchart Brief newsletter.
Subscribe now for quick, incisive midday market analysis you won't find anywhere else. US tech stocks were undercut today by a -8% drop in Cisco Systems after disappointing guidance, and a drop of more than -13% in Cerebras Systems (CBRS) due to a decline in sales at its hardware business. US tech stocks have some carry-over support from an overnight +3.6% rally in the South Korean Kospi index, driven in part by a more than +5% rally in Samsung Electronics and chip-maker SK Hynix.
Today's US PPI report was favorable. The July US final-demand PPI report of unchanged m/m and +4.7% y/y was weaker than market expectations of +0.2% m/m and +4.9% y/y. The July core PPI report of +0.2% m/m was weaker than market expectations of +0.3%, although the year-on-year figure of +4.2% y/y was slightly stronger than market expectations of +4.1% y/y.
The July PPI of +4.7% y/y was down from May's 3.5-year peak of +5.9% y/y but was still far above the Fed's inflation target of +2%. Today's PPI report followed yesterday's favorable July US CPI report, when the July core CPI fell to match the 5.5-year low of +2.5% y/y originally posted earlier this year. Meanwhile, the nominal CPI fell to +3.4% from June's +3.5% but remained well above the 5.5-year low of +2.3% posted last year.
Sep WTI crude oil prices (CLU26) are down more than -1% on the lack of any new military strikes in the Persian Gulf region and on reports that the Trump administration is pivoting to using the naval blockade to apply economic pressure on Iran rather than new military attacks. There are no reports of any progress between the US and Iran toward an agreement to reopen the Strait of Hormuz, although some ships are still getting through by turning off their transponders and hoping for the best. An Iranian military spokesperson said today that no ship can safely pass the Strait of Hormuz without Iran's authorization and supervision and that President Trump's claims of control over the Strait are "nothing more than lies." The Iranian statement was in response to President Trump's comment late Tuesday that the US has "total control over the Hormuz Strait" and that "we own it." The outlook for strong Q2 earnings is a bullish factor for stocks.
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