How is 4/11 PPI and consumer sentiment affect the market?

The deep research logic is organized as follows: 

Okay, let's tackle this question about how the PPI and consumer sentiment data from April 11, 2025, are affecting the market. First, I need to go through all the references provided to gather relevant information.

Starting with the PPI data: Reference 1 mentions that the PPI increased 2.7% year-over-year in March 2025, down from 3.2% in February. Reference 4 and 11 both highlight that the PPI fell unexpectedly by 0.4% month-over-month in March, which is a significant drop. This decline is attributed to a 0.9% drop in goods prices, mainly due to energy costs. The consensus was expecting a 0.2% increase, so this is a surprise. The core PPI also dropped, which is important because it excludes volatile items like food and energy. This suggests that inflation pressures might be easing, which is positive for the market as it could mean the Fed won't need to raise rates further.

Now looking at consumer sentiment: References 3, 5, 12, and 26 all point to a sharp decline in consumer sentiment. The University of Michigan's index fell to 50.8 in April, the lowest since June 2022. Inflation expectations surged to 6.7% for the next year, the highest since 1981. This is a big concern because high inflation expectations can lead to actual inflation, which is bad for the economy. The drop in sentiment is widespread across demographics, indicating a broad-based pessimism. This is likely due to the ongoing tariff tensions between the US and China, which have caused market volatility and fears of a recession.

Putting this together, the market's reaction has been mixed. On one hand, the PPI data showing easing inflation might be seen as positive, potentially leading to a more dovish Fed stance. However, the severe drop in consumer sentiment and the surge in inflation expectations are major red flags. The stock market has been volatile, with the S&P 500 experiencing significant swings. For example, Reference 7 mentions that the S&P 500 rose 1.55% on April 11 after the White House indicated a possible trade deal with China, but this was after a sharp drop earlier in the week. The Nasdaq Composite also saw gains, but the overall market remains shaky due to uncertainty around tariffs and inflation.

The user is interested in the NASDAQ Composite, which is tech-heavy. Tech stocks might be more sensitive to inflation and interest rate changes. The high inflation expectations could lead to higher interest rates, which would pressure tech valuations. However, the PPI data suggesting cooling inflation might counteract that. The conflicting signals from PPI and consumer sentiment create a challenging environment for investors.

Additionally, the Fed's response is crucial. References 15 and 21 indicate that Fed officials are concerned about inflation expectations rising and the impact of tariffs. They might need to balance cooling inflation with supporting economic growth, which is tricky given the current data. The market is likely pricing in some uncertainty here, leading to volatility.

In summary, the PPI data shows some easing of inflation, which is positive, but the consumer sentiment data and inflation expectations are alarming. The market is reacting with volatility, and the NASDAQ Composite's performance is tied to these broader economic signals. Investors need to watch both inflation trends and consumer behavior closely, as well as any developments in trade policy that could further impact sentiment.

**Concluding Statement:**
The April 11, 2025, PPI and consumer sentiment data reveal a **conflicting economic backdrop**—easing inflation pressures in the near term but heightened recession risks and inflationary expectations driven by tariff tensions. This divergence is creating **volatility in equity markets**, particularly in sectors sensitive to inflation and consumer spending.

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### **1. PPI Data: Signs of Cooling Inflation**
- **March 2025 PPI**: The Producer Price Index (PPI) for final demand fell **-0.4% month-over-month** (vs. consensus +0.2%), with goods prices dropping **-0.9%** (70% of the decline). Year-over-year, PPI rose **2.7%** (down from 3.2% in February).
- **Core PPI**: Excluding food and energy, core PPI fell **-0.1%** month-over-month, below expectations.
- **Implications**: The decline suggests **transitory inflation pressures** and reduced near-term Fed rate hike risks. However, the data does not yet reflect the impact of escalating tariffs, which could reverse this trend.

|code|Ticker|Name|Date|Closing Price|market_code|
|---|---|---|---|---|---|
|SPY|SPY.P|SPDR S&P 500 ETF Trust|20250411|533.94|169|

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### **2. Consumer Sentiment: Deepening Recession Fears**
- **April 2025 Sentiment**: The University of Michigan Consumer Sentiment Index plummeted to **50.8** (lowest since June 2022), down **-10%** from March.
- **Inflation Expectations**: 12-month inflation expectations surged to **6.7%** (highest since 1981), while 5-year expectations rose to **4.4%**.
- **Labor Market Concerns**: The share of consumers expecting unemployment to rise hit **2009-era levels**.
- **Tariff Impact**: Sentiment deteriorated across all demographics, driven by uncertainty over Trump’s **145% tariffs on China** and China’s retaliatory **125% tariffs**.

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### **3. Market Reactions: Volatility Amid Policy Uncertainty**
- **Equity Markets**:
- The S&P 500 rebounded **+1.55%** on April 11 after the White House signaled potential trade deal talks.
- Tech-heavy Nasdaq rose **+1.7%**, while the Dow gained **+1.6%**.
- However, broader volatility persists: Dow futures swung **+400 → -300 → +230 points** intraday.
- **Safe-Haven Assets**: Gold hit a record high of **$3,240/oz**, and the Swiss franc surged to a **10-year high** against the dollar.
- **Bond Market**: The 10-year Treasury yield rose to **4.50%**, reflecting inflation and growth concerns.

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### **4. Sector-Specific Risks**
- **Technology**: Tariffs on semiconductor imports and supply chain disruptions could pressure tech valuations.
- **Consumer Discretionary**: Rising inflation expectations and weak sentiment may dampen spending.
- **Materials**: Energy-driven PPI declines may benefit commodity producers, but tariff risks remain.

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### **5. Federal Reserve’s Dilemma**
- **Inflation Anchoring**: Fed officials stress the need to keep long-term inflation expectations stable.
- **Policy Path**: While PPI suggests cooling inflation, surging consumer inflation expectations and tariff-driven risks could force a **more cautious approach** to rate cuts.

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### **Conclusion**
The **April 11 data** highlights a **fragile economic balance**: Near-term inflation relief vs. long-term recession and inflation risks. Investors should monitor **tariff developments** and Fed policy shifts closely. For the NASDAQ Composite, tech stocks remain vulnerable to inflation and rate uncertainty, but the PPI decline offers some near-term relief.