Wall Street struggled to extend record highs on Thursday, as investors opted to lock in profits and adopt a more cautious stance after U.S. producer inflation posted its largest increase in three years.
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The headline Producer Price Index (PPI) jumped 0.9% in July, the steepest monthly gain since June 2022, lifting the annual rate to 3.3%. Both figures far exceeded economists’ forecasts of 0.2% and 2.9%, respectively.
The surge wasn’t driven by volatile components such as energy or food. Core PPI — which excludes both — also spiked 0.9% on the month, the sharpest rise since March 2022, pushing the annual rate to 3.7%.
Traders still assign a 90% probability to a 25-basis-point Federal Reserve rate cut in September, but the odds are narrowing. Upcoming inflation and labor market data are expected to be decisive.
Despite the inflation surprise, stocks slipped only …