Producer Price Index (PPI) Surges 0.9% MoM, Largest Gain in Three Years, Stocks Take a Hit

Producer inflation surged 0.9% in July, the biggest monthly gain in three years, with core PPI rising 0.9% and the annual rate reaching 3.7%. The data, influenced by President Trump's tariffs, is weighing on risk assets, with futures on the S&P 500, Nasdaq 100, and Dow Jones down 0.4%, 0.5%, and 0.3%, respectively. Bitcoin tumbled 4% after hitting a record high, while large-cap stocks such as Marvell Technology, Coinbase Global, and Robinhood Markets fell by 2.66%, 2.49%, and 1.97%, respectively.

Producer price inflation surged 0.9% in July, marking the largest monthly gain in three years. This increase was driven by core producer price index (PPI) rising 0.9%, with the annual rate reaching 3.7%. The data, influenced by President Trump's tariffs, is weighing on risk assets, with futures on the S&P 500, Nasdaq 100, and Dow Jones down 0.4%, 0.5%, and 0.3%, respectively.

The July PPI report indicates a significant uptick in input costs for businesses, which could translate into higher prices for consumers in the coming months. The increase in core PPI, which excludes food and energy prices, suggests that the rise in inflation is not solely due to volatile commodities but also reflects broader economic pressures.

The data comes as a setback for investors, as it underscores the ongoing challenges in the U.S. economy. The tariffs implemented by the Trump administration have contributed to higher input costs, which are now being passed on to consumers and businesses. This inflationary environment is likely to put pressure on the Federal Reserve to adjust its monetary policy, potentially leading to higher interest rates.

The impact on risk assets was immediate, with major stock indices experiencing losses. The S&P 500, Nasdaq 100, and Dow Jones futures all declined, reflecting investor concern over the potential economic slowdown. Additionally, large-cap stocks such as Marvell Technology, Coinbase Global, and Robinhood Markets fell by 2.66%, 2.49%, and 1.97%, respectively, indicating a broader sell-off in the tech sector.

Bitcoin, which had reached a record high earlier in the day, tumbled 4% after the release of the PPI data. The cryptocurrency market, which is often seen as a safe haven, has been volatile in recent months, with the latest decline suggesting that investors are seeking safer assets amid economic uncertainty.

Overall, the July PPI report highlights the ongoing challenges in the U.S. economy and the potential for higher inflation to impact consumer prices and business operations. Investors will be closely watching the Federal Reserve's response to the latest data and the potential implications for monetary policy.

References:

[1] https://africa.businessinsider.com/local/markets/mali-mine-seizure-deals-dollar1-billion-blow-to-worlds-second-largest-gold-producer/mm20kt6
[2] https://www.businesswire.com/news/home/20250416384950/en/BlackRock-Expands-iShares-Build-ETF-Toolkit-with-Industrys-First-SP-500-3-Capped-Weighted-ETF