Investors reacted to a higher-than-expected reading of the producer price index for November by lowering major US stock averages on Thursday.
The Dow Jones Industrial Average and Nasdaq Composite were both 0.2% lower at the time this article was written. S&P 500 was also down 0.2% Thursday.
In November, the producer price index, which measures wholesale prices in the US rose by 0.4%, compared to analysts’ expectation of 0.2%.
After the market’s expectations were met on Wednesday, this producer price index confirms those. Investors had been expecting another Federal Reserve interest rate reduction next week.
Clark Bellin is the president and chief investor officer of Bellwether Wealth.
While Thursday’s PPI was stronger-than-expected, we believe the Federal Reserve will still proceed with its expected 25 basis point rate cut in December, since other inflation data points in recent weeks and months have moved in the right direction.
The Nasdaq Composite reached 20,000 on Wednesday for the very first time. S&P 500 also rose, while Dow Jones had its fifth straight session of losses.
Adobe plunges, Uber gains
Adobe’s share price fell by nearly 13 percent despite exceeding its fourth-quarter earnings estimate, and falling behind the full-year forecasts.
It was disappointing to see the company’s annual sales forecast, which indicated that it would take longer to achieve its goals of incorporating artificial intelligence in its products than anticipated.
Uber shares rose more than 3 percent, recovering from earlier losses this week.
After General Motors stopped funding Cruise, the stock dropped by nearly 6%.
Uber and the autonomous driving division partnered.
The Producer Price Index is hot!
The US Federal Reserve’s outlook on future monetary policy is clouded by the fact that wholesale prices increased more than anticipated in November.
In November, the index rose 0.4% month over month. Dow Jones polled economists who expected the number to be 0.2%.
The market expects that the US Fed will cut rates by 25 basis point at its policy meeting next week, but the higher-than-expected number could cause confusion.
The Fed has been cautious in its approach to rate cuts due to the fact that the US inflation has not changed.
CME FedWatch shows that traders have priced in 99.1% of the probability for the Fed to cut rates next week by 25 basis points.
Shares of Riot Platforms Jump
The Wall Street Journal revealed that activist investor Starboard Value had taken an important position in Riot Platforms, a bitcoin miner.
The report also stated that investors wanted the company to turn some of its Bitcoin mining facilities into spaces for users of big-data centers.
Starboard did not disclose the amount of its stake in this report.
The company shares are nearly 10% higher than the last close at the time this article was written.
The post Adobe plummets while Riot Platform soars: Investors assess the hot Producer Price Index may be updated as new developments unfold.
