Stocks had a strong showing on Tuesday after the latest US headline inflation report came out. However, according to Evercore ISI, investors should tread lightly. A Wall Street research firm warned on Tuesday that monthly producer price index readings have little correlation with the more widely followed consumer price index, which could keep the stock market volatile. The PPI reading for July showed a 0.1% increase, which was less than economists had expected. In other words, just because the PPI rose less than expected doesn’t mean investors should expect a subdued CBI report on Wednesday. Stephen Stanley at Santander US echoed that sentiment: “Financial markets overreact to PPI every month,” said Stanley, the bank’s chief economist. ” [It] CBI has limited implications, [which] If July CPI data released on Wednesday adds further credence to expectations of the Federal Reserve cutting rates next month, it could provide another boost to stocks. The S&P 500 closed Tuesday’s session nearly 2% higher. , the Nasdaq Composite rose 2.4%, the Dow Jones industrial average rose more than 408 points, or 1.04%, and the Dow and S&P 500 are now off their biggest declines. One-day pull-ups from 2022. .SPX 5D Mountain 5-Day Chart “When you think of a bullback, you’ve got a normal August climate with a ‘black swan’ event,” David Russell, head of global market strategy at TradeStation, said on Tuesday. , noting the weak July nonfarm payrolls report that triggered a global market sell-off earlier last week, said, “The data is still not bad enough to overtake earnings. … We’re still looking at double-digit earnings growth.”
