The Dow Jones Industrial Average rose on Tuesday as traders weighed in on a weaker-than-expected report on the producer price index.
The 30-share Dow gained 221.16 points, or 0.52%, to close at 42,518.28. The S&P 500 advanced 0.11% to 5,842.91, while the tech-rich Nasdaq Composite fell 0.23% to end at 19,044.39
Shares of major technology companies slipped on Tuesday, weighing on the S&P 500 and Nasdaq. Nvidia fell 1.1% and Meta Platforms fell 2.3%. However, investors flocked to utilities, financials and materials, with each sector rising more than 1%. The SPDR S&P Regional Bank ETF (KRE) and the SPDR S&P Bank ETF (KBE) rose 3% each.
The producer price index, which measures wholesale inflation, rose just 0.2% in December, according to a report from the Bureau of Labor Statistics. Economists polled by Dow Jones had expected a 0.4 percent rise. Core PPI, which excludes food and energy, was unchanged.
Investors are now looking to Wednesday’s consumer price index report to gauge whether the Federal Reserve is managing to bring inflation closer to its 2% target, which would allow the central bank to ease interest rate policy, SEEbiz reports. Economists forecast overall CPI to rise 0.3% in December, according to Dow Jones.
“If the CPI comes in higher than expected, that would certainly be bad news for equity markets because it would imply that the Fed will indeed remain slower to cut interest rates,” said Sam Stovall, chief investment strategist at CFRA Research.
Fed funds futures point to a near certainty that the Fed will keep interest rates steady at the end of its two-day meeting later this month. Market prices also suggest a 77.9% probability that rates will remain at the current target range of 4.25%-4.5% in March, according to the CME FedWatch tool.
On the earnings side, banking giants will kick off their fourth-quarter earnings season this week, with JPMorgan Chase, Citigroup, Goldman Sachs and Wells Fargo reporting results on Wednesday. Morgan Stanley and Bank of America are due to report on Thursday.
