Nasdaq is down amid higher than expected PPI report, and oil supplies getting tighter
The Federal Reserve’s policy choices are once again under the spotlight in a financial environment characterized by shifting tides. Recent events have raised questions regarding the direction of the central bank’s policies as the likelihood of keeping the present policy rate rises. The Federal Reserve’s formula for determining inflation uses the most recent data, which has revealed a continuous moderation in prices. In particular, the Consumer Price Index stood strong with a 0.2% increase in July, in line with forecasts.
As a result of yesterday’s inflation report, Wall Street surged, but the gains didn’t last for that long. Today another crucial report was released the producer price readings. Unfortunately, the reading came in higher than the market estimates.
Generally speaking, the U.S. PPI reading came in hotter than the Markt explication, which said that there are still various economic challenges to be dealt with.
As for the reading, here are some of the most important notes we took for the report
- Producer Price Index (PPI) exceeded expectations on both a headline and core basis.
- Yearly PPI increased by 0.8%, slightly surpassing the anticipated 0.7%.
- Monthly PPI rose 0.3%, outperforming projected 0.2%.
- Core PPI surged 2.4% annually, surpassing expectations.
- S. Consumer Price Index (CPI) report on Thursday revealed lower-than-expected annual headline inflation for July.
- This outcome strengthened speculations about the Federal Reserve reconsidering its ongoing interest rate hike strategy.
- Despite lower CPI, inflation remains above the Fed’s medium-term target.
- Market expectations for a rate cut this year were reduced, with rates projected to stay at 22-year highs.
- University of Michigan’s consumer sentiment reading slightly exceeded expectations, registering at 71.2.
Meanwhile; as of 15:10 ET, the Dow Jones Industrial Average was up 110 points, or 0.31%, while the S&P 500 was up 0.2% and the NASDAQ Composite was down 0.39%.
In other economic news, the oil sector remains tight, and its prices remind me of the $80 per barrel level. What makes it even worse is the recent suggestion by the oil Mafia in Saudi Arabia and oil producers. The OPEC members are moving to add extra oil cuts in the future, in a move that will affect the global supply market and add enormous pressure on the dollar.
The Organization of the Petroleum Exporting Countries (OPEC) has provided its own analysis of how the demand for oil is expected to develop. OPEC is still more upbeat about the future despite the IEA’s cautious projection, citing hopes for a significant rise in global oil consumption. The group anticipates an increase of 2.25 million barrels per day in 2024, expressing optimism about recovery from the current macroeconomic difficulties. This upbeat forecast contrasts with OPEC’s forecast for the current year, which calls for a growth rate of 2.44 million barrels per day. These divergent opinions from significant sources highlight how difficult it is to anticipate the behavior of the oil market and allow the opportunity for conjecture about the future course that oil prices and the world energy markets may follow.