US Producer Price Index Flat, Restraining Inflation Fears

US Producer Price Index Flat, Restraining Inflation Fears

US Producer Price Index Flat, Restraining Inflation Fears

$DIA, $SPY, $QQQ, $RUTX, $VXX

US wholesale prices were unchanged in July after 2 months of increases, indicating inflation pressures have softened a bit.

Thursday, the Labor Department said that the PPI (producer price index) which measures price changes before they reach the consumer increased 3.3% last month from a year earlier, down slightly from 3.4% in June, which was the biggest in 6 years.

Gasoline prices and other energy costs fell after 2 months of strong gainers, and food costs also declined.

With the economy growing at a healthy pace, inflation has perked up after nearly a decade of mostly tame prices. Higher gasoline prices have been the Key catalyst, but they have leveled off in recent weeks.

The average price nationwide for a gallon of gasoline was $2.87 Thursday, according to AAA, the same as last month.

The consumer price index increased 2.9% in June from a year earlier, also the largest in 6 years.

The Fed’s preferred inflation gauge has risen at a more muted pace, increasing 2.2% in the past year. The Fed targets 2% inflation to protect against deflation, a destabilizing trend that leads to lower prices and incomes. Price increases were below 2% for years, according to the Fed’s gauge.

The Fed is raising the short-term interest rate it controls in an effort to keep inflation in check. Fed policymakers have increased the rate 5X in the past 3 years, to between 1.75 and 2%. They have indicated they will hike 2X more this year.

Good & Services

Goods prices rose 4.5% in July from a year earlier, the strongest gain in 6.5 years, led by higher costs for new cars and pharmaceuticals. Services costs have increased 2.6% in the past year.

Looking ahead

Investors will receive both the Consumer Price Index (CPI) for July and the July Treasury Budget Friday.

Thursday, the major US stock market indexes finished at: DJIA -74.52 at 25509.23, NAS Comp +3.46 at 7891.79, S&P 500-4.12 at 2853.32

Volume: Trade on the NYSE came in at 651-M/shares exchanged

  • NAS Comp +14.3% YTD
  • Russell 2000 +10.1% YTD
  • S&P 500 +6.7% YTD
  • DJIA +3.2% YTD

HeffX-LTN’s Major US Market Indexes Technical Analysis

Date Symbol Price Technical Analysis Support Resistance
9 August 2018 QQQ 181.91 Bullish (0.31) 181.12 182.82
9 August 2018 DIA 255.16 Bullish (0.36) 253.90 255.33
9 August 2018 SPY 285.07 Bullish (0.33) 284.31 288.34

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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