More economic data, earnings reports, performance outlooks from management teams, and the Federal Reserve are driving sentiment in the stock market today. Whether you’re trading penny stocks or higher-priced company shares, there’s no getting around the flood of data to sift through.
With that has come plenty of speculation on where to plant your money while secular trends remain volatile. Even with the choppiness in the stock market today, the S&P 500 (NYSEARCA: SPY) has upheld a consistent channel trade since the end of March. The 50-day moving average continues to be lower support while the upper end of the channel sits around $417.
Yesterday’s April CPI inflation report brought some confusion to the markets. Most readouts came in line with expectations, while Year over Year CPI came in slightly below estimates. Now, the markets focus on the Producer Price Index inflation report and the cost to produce goods and services. On top of that, you’ve got the US debt crisis looming and Janet Yellen in the spotlight.
JP Morgan CEO Jamie Dimon recently said that the debt ceiling is potentially catastrophic but regional banks are quite strong. “The closer you get to (a US default), you will have panic,” Dimon said at a Bloomberg event. Nevertheless, the attention remains on inflation in the stock market today, and PPI inflation data is out.
What Is PPI Inflation Data & What Is The PPI Report?
PPI is “a measure of the average change over time in the selling prices received by domestic producers for their output is what has defined the producer pricing index,” according to the U.S. Bureau of Labor Statistics. “The prices included in the PPI are from the first commercial transaction for many products and some services.”
PPI vs. CPI: Why Does PPI Matter?
The Produce Price Index inflation data matters because it is a data point for investors to understand future inflationary tendencies. It can also be used as a means for enacting monetary policy.
CPI Data V.S. PPI Data
Compared to CPI data, Producer Prices in the PPI report show a picture from the lens of companies producing final products, what their input costs are, and give a glimpse into whether or not prices could trigger a jump or drop in retail costs that consumers incur.
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PPI Expectations April 2023
Let’s look at PPI expectations for April 2023. The year-over-year PPI estimates for April are set at 2.4%. This would be less than the 2.7% PPI readout from the last Produce Price inflation report. The month-over-month figures are likely to be the most telling sign for the market. Estimates put this at 0.3% for April.
The Producer Price Index Report For April 2023 & PPI Numbers
The Producer Price Index for final demand advanced 0.2% in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices fell 0.4% in March and were unchanged in February. On an unadjusted basis, the final demand index increased 2.3% for the 12 months ending in April.
In April, 80% of the rise in the index for final demand is attributable to a 0.3-percent increase in prices for final demand services. The index for final demand goods advanced 0.2%.
Prices for final demand less foods, energy, and trade services rose 0.2% in April after inching up 0.1% in March. For the 12 months ended in April, the index for final demand less foods, energy, and trade services increased 3.4%.
Final demand services: Prices for final demand services increased 0.3% in April, the most significant increase since a 0.4-percent rise in November 2022. Leading the advance in April, the index for final demand services less trade, transportation, and warehousing climbed 0.4%. Margins for final demand trade services increased 0.5%. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, the index for final demand transportation and warehousing services decreased 1.7%.
Product detail: Over one-third of the April advance in the index for final demand services can be traced to a 4.1-percent rise in prices for portfolio management. The indexes for food and alcohol wholesaling, outpatient care (partial), loan services (partial), hospital inpatient care, and guestroom rental also increased. Conversely, prices for long-distance motor carrying declined 2.3%.
The indexes for food retailing and for securities brokerage, dealing, and investment advice also fell.
Final Demand Goods
Final demand goods: Prices for final demand goods increased 0.2% in April after falling 1.0% in March. Leading the advance, the index for final demand energy rose 0.8%. Prices for final demand goods less foods and energy moved up 0.2%. In contrast, the index for final demand foods decreased 0.5%.
Product detail: An 8.4% advance in gasoline prices was a significant factor in the April increase in the index for final demand goods. Prices for fresh and dry vegetables, carbon steel scrap, plastic resins and materials, aircraft and aircraft equipment, and fluid power equipment also increased. Conversely, the index for chicken eggs dropped 37.9%. Prices for jet fuel and for light motor trucks also declined.
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The Stock Market Today – May 11, 2023
Immediately following the results, broader markets pulled back. The SPY dipped below $412, and the Dow Jones (NYSEARCA:DIA) dropped below $334. Meanwhile, the Nasdaq (NASDAQ:QQQ) continued climbing above the $325 level.
More than a handful of penny stocks found sound footing during the premarket session, with many surging higher. Safe Harbor Financial (NASDAQ: SHFS) shares jumped after the company announced a partnership with Five Star Bank. The two aim to create a “potential billion-dollar growth opportunity for cannabis banking.”
Sunshine Biopharma (NASDAQ: SBFM) more than doubled after reporting its first quarter results. The company’s sales jumped from under $123,000 last year to over $4.8 million this year. We are thrilled with our first quarter results and look forward to equally exciting results for the rest of 2023 and further growth in the coming year and beyond,” said Camille Sebaaly, CFO of Sunshine Biopharma.
Meanwhile, topline results from Praxis Precision Medicines’ (NASDAQ: PRAX) PRAX-628 study raised eyebrows in the stock market today. The results support preclinical profile for the candidate indicating a potential for best-in-class efficacy. “Today’s data reinforce our expectations that PRAX-628 has the potential to be the best-in-class treatment for patients suffering from focal epilepsy,” said Marcio Souza, president and chief executive officer of Praxis. “Today’s results support previously announced preclinical data to demonstrate that the unique functional selectivity of PRAX-628 may lead to a wider therapeutic range than current standard-of-care and other potential treatments in development.”