Stock Market Update

The S&P 500 futures currently trade 31 points below fair value.

The December Producer Price Index was met with an initially negative response, as it checked in hotter than expected. The Producer Price Index for final demand increased 0.5% month-over-month (Briefing.com consensus: 0.2%), with the index for final demand services up 0.7%. The index for final demand, excluding food and energy, jumped 0.6% month-over-month (Briefing.com consensus: 0.3%).

On a year-over-year basis, the index for final demand was up 3.0%, unchanged from November, while the index for final demand, excluding food and energy, was up 3.2% versus 3.0% in November.

The key takeaway from the report is the lingering 3-handle on the year-over-year changes, which will keep alive concerns about pass-through (to the consumer) and possible margin compression (for wholesalers and retailers) if they don't pass-through their higher costs.