Dow Poised to Rise as Fed Rate Decision Approaches
Stocks and bond markets moved sharply after a hotter-than-expected inflation report. The producer price index for final demand jumped in February, surprising economists.
Market reaction
Futures for major indexes turned negative following the report. Dow futures fell 0.2%, S&P 500 futures slid 0.2%, and Nasdaq 100 futures dropped 0.2%.
All three futures had been flat before the data hit. Some strategists had expected gains. They noted Dow Poised to Rise as Fed Rate Decision Approaches.
Inflation surprise
The producer price index for final demand rose 0.7% in February from January. Economists had been forecasting a 0.3% gain.
The bigger-than-expected print added pressure to fixed-income markets. Traders recalibrated rate expectations immediately.
Bond yields
Short-term yields jumped on the news. The 2-year Treasury yield climbed to about 3.7%.
Longer maturities also rose. The 10-year Treasury yield moved up to roughly 4.2%.
Commodities
Oil futures edged higher after the inflation surprise. WTI crude rose 0.2% to $96.43 per barrel.
The contract had traded lower for much of the morning. The late uptick followed the PPI release.
Key figures at a glance
- Producer Price Index (Feb month-over-month): +0.7% (expected +0.3%)
- Dow futures: -0.2%
- S&P 500 futures: -0.2%
- Nasdaq 100 futures: -0.2%
- 2-year Treasury yield: ~3.7%
- 10-year Treasury yield: ~4.2%
- WTI crude: $96.43, +0.2%
Traders now await the Federal Reserve decision. Markets will watch future inflation readings closely.
Report published by Filmogaz.com.
