The Dow Bounces Back 160 Points as Wholesale Inflation Falls
Tuesday, Jan 14, 2025 11:12 am ET
1min read The Dow Jones Industrial Average (DJIA) surged by 160 points on Tuesday, April 13, 2023, as investors reacted to an unanticipated decline in the Producer Price Index (PPI). The PPI, a key indicator of wholesale inflation, fell 0.1% in March, below the expected 0.4% increase. This unexpected drop in producer prices boosted optimism that the Federal Reserve might ease back on interest rate hikes to fight inflation. The Dow and S&P 500 finished the session more than 1% higher, while the Nasdaq added 2%.
The decline in PPI sent U.S. stocks higher, with tech stocks leading the advance. Amazon (AMZN) shares jumped more than 4% as the company announced a move into artificial intelligence (AI). Other FAAMG stocks (Facebook, Apple, Amazon, Microsoft, and Google) also saw gains. Shares of Tesla (TSLA), Cisco Systems (CSCO), and Salesforce (CRM) were higher. The possibility of lower borrowing costs benefits tech stocks, which helped power the advance.
SolarEdge Technologies (SEDG) and Enphase Energy (ENPH) were the best-performing stocks in the S&P 500 after HSBC initiated coverage with a buy rating for both. Deutsche Bank also advised clients to pick up Enphase shares. Shares of other solar power companies climbed as well. DISH Network (DISH) shares bounced back after sinking to a 24-year low the previous day that was prompted by an analyst price cut.
The decline in PPI also influenced the market's perception of the Fed's next move. Investors are now more optimistic about the Fed potentially adjusting its monetary policy in response to the subdued inflation data. The market's positive reaction to the PPI data suggests that investors are hopeful that the Fed will ease back on interest rate hikes, which could support economic growth and boost stock prices.
In conclusion, the unexpected decline in the Producer Price Index (PPI) sent U.S. stocks higher on April 13, 2023, as investors reacted to the news with optimism. The decline in PPI boosted hopes that the Federal Reserve might ease back on interest rate hikes, which could support economic growth and boost stock prices. Tech stocks and solar power companies led the advance, while the market's sentiment suggests that investors are now more optimistic about the Fed's next move.
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