There was a calmness before the release of the April Producer Price Index (PPI) at 8:30 a.m. ET, and there was also a craziness — some might even say a mania.<\/p>\n\n\n\n
The latter had nothing to do with the PPI, or news of President Biden announcing big tariff increases for a number of products coming from China, including EVs and semiconductors, and everything to do with the meme stocks, which have continued with some straight-line appreciation that has the likes of\u00a0GameStop (GME<\/span>)<\/strong>,\u00a0AMC<\/span> Entertainment (AMC)<\/strong>, and\u00a0SunPower (SPWR<\/span>)<\/strong>\u00a0up more than 100% in the pre-market fun house.<\/p>\n\n\n\n With the release of the PPI, though, a little more craziness was added to the mix. It was not a good report on the surface, but it was also not as bad when factoring in downward revisions to the prior month.<\/p>\n\n\n\n Briefly, the Producer Price index for final demand increased 0.5% month-over-month in April (Briefing.com consensus 0.3%) following a downwardly revised 0.1% decline (from 0.2%) in March. The index for final demand, excluding food and energy, also increased 0.5% month-over-month (Briefing.com consensus 0.2%) following a downwardly revised 0.1% decline (from 0.2%) in March<\/p>\n\n\n\n On a year-over-year basis, the index for final demand was up 2.2%, marking the largest increase since April 2023, while the index for final demand, excluding food and energy, was up 2.4%, unchanged from March.<\/p>\n\n\n\n The key takeaway from the report is that nearly three quarters of the increase in final demand prices was due to a 0.6% increase in the index for final demand services, something that will detract from the Fed’s confidence that inflation is on a sustainable path to its 2% target.<\/p>\n\n\n\n As one might expect, Treasury yields took a turn higher on the headlines while equity index futures took a turn lower. Both, however, have returned to a calmer state in a symbiotic trade.<\/p>\n\n\n\n The 2-yr note yield went from 4.84% to 4.87% and is now at 4.85%, down one basis point from yesterday. The 10-yr note yield went from 4.48% to 4.51% and is now at 4.48%, unchanged from yesterday.<\/p>\n\n\n\n The S&P 500 futures went from up three points to down 10 points. Currently, they are down three points and are trading in-line with fair value, the Nasdaq 100 futures are down 42 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are up 29 points and are trading 0.1% above fair value.<\/p>\n\n\n\n All things considered, that is a very mild-mannered reaction to wholesaler price data that was not mild — at least not in April.<\/p>\n\n\n\n Tomorrow brings the Consumer Price Index (CPI), which will likely have a greater impact on consumer sentiment and market sentiment after its release since it is something to which everyone can relate.<\/p>\n\n\n\n