Wall Street stocks were slightly lower in early trade on Friday after the government reported a modest rise in wholesale prices last month, suggesting the Federal Reserve’s work to contain inflation is still ongoing.
The S&P 500 lost 0.1% for the second consecutive week of losses. The Dow Jones Industrial Average was up 57 points, or 0.1%, to 35,146 as of 10:04 a.m. Eastern Time. The Nasdaq Composite was down 0.5%.
Big tech companies were among the biggest losers early on. Chipmaker Advanced Micro Devices fell 2%.
The Department of Labor reported on Friday that it is producer price indexwhich measures inflation before it reaches consumers, rose 0.8% over the last month since July 2022. The latest figure followed a 0.2% year-on-year increase in June, marking the smallest annual increase since August 2020.
“Not surprisingly, today’s report gives the Fed’s tightening wing more opportunity to push for another rate hike before the Fed is confident it has reached its target rate,” said Quincy Krosby, chief global strategist at LPL Financial.
Bond yields rose, including the two-year government bond yield, which rose to 4.88% from 4.80% just before the report was published. Two-year Treasury yields are broadly in line with Fed expectations.
The wholesale prices data follow the release of the government’s consumer price index on Thursday, which showed the same US consumers paid 3.2% higher prices in July than a year before. That’s slightly milder than the 3.3% inflation rate economists were expecting and well below last summer’s peak of over 9%. The underlying inflation trends were also in line with expectations.
Overall, inflation has moderated over the past year but is still above the Fed’s 2% target. The moderate pace of price increases, combined with a resilient labor market, has raised hopes that the Fed could pull off a difficult “soft landing”: it would raise rates enough to slow borrowing and curb inflation without triggering a painful recession.
Such hopes helped the S&P 500 soar a whopping 19.5% for the first seven months of the year, though critics say Wall Street was too quick to reach a consensus that inflation was cooling further, the economy into a recession will avoid and the Fed has already raised rates for the last time in this cycle.
The Fed has said it will make future decisions on interest rates based on the data reports, particularly those on inflation and the labor market. The key interest rate is already at its highest level in more than two decades.
The yield on the 10-year government bond rose to 4.14% from 4.10% late Thursday. It helps set interest rates on mortgages and other major loans.
On the equity markets abroad, indices were down in Europe and mixed in Asia.
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