US producer prices increased more than expected in January, rising 0.7% from the previous month, according to the US Bureau of Labor Statistics.[0] Economists surveyed by Dow Jones had predicted a 0.4% rise, whereas the actual increase was higher than that.[1] The core Producer Price Index, not including food and energy, rose by 0.5%, higher than the anticipated 0.3% gain.[2] Core, not including trade services, rose by 0.6%, surpassing the expected 0.2% growth.[3]
The strong producer price data has reignited inflation fears, with markets expecting the Federal Reserve to raise interest rates by a quarter of a percentage point when it meets next month.[4] Economists are citing seasonal factors as well as delayed price increases from prior months as the main cause of the January inflation rise.[5] The unusually warm winter could have contributed to the situation, and fuel prices, which can be unstable, increased in the same period.[5]
On Thursday, stocks decreased sharply following the release of the US government’s Producer Price Index report, which indicated that prices at the wholesale level had increased at a faster rate than anticipated in January.[6] At noon, the Dow Jones Industrial Average dropped 195 points to 33,933, the S&P 500 Index decreased by 24 points to 4,123, and the tech-oriented Nasdaq Composite lost 73 points to 11,998.[7]
Shopify Inc. saw a 16% decrease in its shares after announcing that its first-quarter revenue is likely to be lower than anticipated.[7] After its fourth quarter revenue beat expectations, as well as a 16% increase in active users, shares of Roku, Inc. (NASDAQ:ROKU) rose by 17.5%.[8] The company anticipated robust growth for the current quarter, attributing it to their streaming devices and content platform.[9] Shares of Cisco Systems (CSCO) surged by over 4% in pre-market trading due to their Q2 revenue of $13.59 billion, which was higher than the expected $13.43 billion. Additionally, the company raised their full-year revenue forecast to between 9% and 10.5%, higher than the consensus of +5.7%.[8]
This week, a report from the Labor Department revealed that consumer prices had increased by 6.4% in January, compared to the same month a year ago; this was slightly lower than the 6.5% in December and marked the seventh consecutive month of decreasing inflation.[4] [7]
0. “U.S. Producer Prices Climb 0.7% In January, More Than Expected” RTTNews, 16 Feb. 2023, https://www.rttnews.com/3344710/u-s-producer-prices-climb-0-7-in-january-more-than-expected.aspx
1. “Higher Gasoline Prices Drive U.S. Producer Price Index Higher” OilPrice.com, 16 Feb. 2023, https://oilprice.com/Latest-Energy-News/World-News/Higher-Gasoline-Prices-Drive-US-Producer-Price-Index-Higher.html
2. “Producer price index January 2023:” CNBC, 16 Feb. 2023, https://www.cnbc.com/2023/02/16/producer-price-index-january-2023-.html
3. “Producer Price Index – January 2023” Forex Factory, 16 Feb. 2023, https://www.forexfactory.com/news/1206036-producer-price-index-january-2023
4. “Producer Prices Rose, Pointing to Persistent Inflation” MarketWatch, 16 Feb. 2023, https://www.marketwatch.com/story/producer-prices-rose-pointing-to-persistent-inflation-4dda60ef
5. “Crypto Market Tumbles After U.S. PPI Data Comes At 6%” CoinGape, 16 Feb. 2023, https://coingape.com/crypto-market-tumbles-after-u-s-ppi-data-rises-0-7-in-january/
6. “Stocks slide as investors worry about more rate hikes” KAKE, 16 Feb. 2023, https://www.kake.com/story/48395912/stocks-slide-as-investors-worry-about-more-rate-hikes
7. “S&P 500, Nasdaq, Dow lower on PPI data” Proactive Investors USA, 16 Feb. 2023, https://www.proactiveinvestors.com/companies/news/1006414/s-p-500-nasdaq-dow-lower-on-ppi-data-1006414.html
8. “Markets Today: Stock Index Futures Tumble as U.S. Jan PPI Exceeds Forecasts” Barchart, 16 Feb. 2023, https://www.barchart.com/story/news/14268583/markets-today-stock-index-futures-tumble-as-u-s-jan-ppi-exceeds-forecasts
9. “U.S. stocks are falling after hotter-than-expected producer prices By Investing.com” Investing.com, 16 Feb. 2023, https://www.investing.com/news/stock-market-news/us-stocks-are-falling-after-hotter-than-expected-producer-prices-3005848