Stock Market Update

[BRIEFING.COM] The stock market trades higher, invigorated by a drop in Treasury yields. The S&P 500 is 0.4% higher and the 10-yr yield is down 11 basis points from yesterday at 4.53%.

The move followed a better-than-feared January PPI report that showed month-over-month declines in some components like airfare and physician care, which should help keep the PCE Price Index (the Fed's preferred inflation gauge) in check despite yesterday's hot CPI data. 

The price action was also related to President Trump's reciprocal tariff plan (announced later today in a presidential memorandum, as opposed to an executive order, and expected to have a delayed implementation until April) that was deemed friendlier than expected and the release of the weekly jobless claims, which remain relatively low.

Just about everything is coming along for the upside ride in equities. Eight of the 11 S&P 500 sectors are higher led by technology, which shows a 1.1% gain. The utilities sector shows the "largest" decline, down 0.3% from yesterday. 

Outsized moves are mostly reserved for individual stocks with specific news items. MGM Resorts (MGM 40.63, +6.27, +18.4%) and GE Healthcare (GEHC 93.88, +7.92, +9.2%) are big movers in the S&P 500 after their earnings reports while AppLovin (APP 453.03, +73.10, +19.1%) and Robinhood Markets (HOOD 62.62, +6.66, +11.9%) also show solid gains post-earnings.

Reviewing today's economic data:

• January PPI 0.4% (Briefing.com consensus 0.2%); Prior was revised to 0.5% from 0.2%, January Core PPI 0.3% (Briefing.com consensus 0.3%); Prior was revised to 0.4% from 0.0%
  • The key takeaway from the report is that the month-over-month readings were less upsetting than the month-over-month readings seen in the CPI report. Also, the year-over-year readings look improved at first blush, yet the revisions moved the December year-over-year readings for PPI and core PPI higher (versus the initial readings), so the improvement in January is from a higher base, meaning it is relative and not absolute. (Sidenote: when the December PPI report was first released, PPI was up 3.3% year-over-year and core PPI was up 3.5%).
• Weekly Initial Claims 213K (Briefing.com consensus 217K); Prior was revised to 220K from 219K, Weekly Continuing Claims 1.850 mln; Prior 1.886 mln
  • The key takeaway from the report is the low level of initial jobless claims, which continue to connote an otherwise positive demand outlook on the part of employers who are reluctant to cut staff.