Stocks experienced volatility on Thursday as investors digested new inflation data and contemplated its potential impact on the Federal Reserve’s interest rate plans. Wall Street also looked ahead to the upcoming first-quarter earnings season, which is set to unofficially kick off tomorrow with reports from several major banks.
After Wednesday’s higher-than-expected March Consumer Price Index (CPI) caused stocks to plummet, investors found some relief in this morning’s Producer Price Index (PPI) report. The Bureau of Labor Statistics revealed that the PPI, which measures the prices that businesses pay suppliers for goods, only rose by 0.2% month-over-month in March. This was the slowest monthly increase since November and lower than what economists had predicted. On an annual basis, the headline PPI was up by 2.1%, marking the quickest pace since April 2023.
The core PPI, which excludes volatile food and energy prices, also saw a slowdown in its monthly increase (0.2% compared to February’s 0.3%), but showed a year-over-year increase (2.8% compared to February’s 2.7%).
Larry Tentarelli, president and founder of Blue Chip Daily Trend Report, commented on the positive PPI reading, suggesting that investors should anticipate fewer Fed rate cuts this year, possibly one or two, with the first potential rate cut not expected until the July meeting. Federal Reserve officials, including Boston Fed President Susan Collins, also discussed inflation and interest rates following the PPI report, emphasizing the need for patience.
In single-stock news, Nike saw a 3.4% increase after BofA Securities analyst Lorraine Hutchinson upgraded the Dow Jones stock to Buy from Neutral. Hutchinson highlighted Nike’s strong brand and growth prospects, noting that the company is taking steps to transform and could benefit from this year’s Summer Olympics.
On the other hand, CarMax experienced a 9.2% drop after reporting earnings that fell short of analysts’ expectations. The company also revised its goal to sell over 2 million vehicles, delaying the target to between fiscal 2026 and fiscal 2030.
In the market, the Nasdaq Composite performed well, gaining 1.7% to 16,442, driven by strength in stocks like Alphabet, Apple, and Nvidia. The S&P 500 rose by 0.7% to 5,199, while the Dow Jones Industrial Average finished slightly lower at 38,459.
Looking ahead, the first-quarter earnings season is set to begin tomorrow with reports from major banks like JPMorgan Chase. Analysts anticipate modest year-over-year declines in earnings and revenue for the S&P 500, with an estimated growth rate of 3.2%. If this holds true, it will mark the third consecutive quarter of year-over-year earnings growth for the index.