Originally Published: November 15, 2023, 8:30 am ET
Updated: November 15, 2023, 9:57 am ET
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.
PPI Expectations For October
Let’s look at PPI expectations for October 2023:
PPI Expectations (month-over-month): 0.1%, Previous read was 0.5%
PPI Expectations (year-over-year): 1.9%, Previous read was 2.2%
CORE PPI Expectations (month-over-month): 0.3%, Previous read was 0.3%
CORE PPI Expectations (year-over-year): 2.7%, Previous read was 2.7%
The Producer Price Index Report For October 2023 & PPI Numbers
The Producer Price Index for final demand fell 0.5 percent in October, seasonally adjusted, after advancing 0.4 percent in September, the U.S. Bureau of Labor Statistics reported today. (See table A.) The October decline is the largest decrease in final demand prices since a 1.2-percent drop in April 2020. On an unadjusted basis, the index for final demand rose 1.3 percent for the 12 months ended in October.
In October, the index for final demand goods fell 1.4 percent. Prices for final demand services were unchanged.
The index for final demand less foods, energy, and trade services advanced 0.1 percent in October, the fifth consecutive rise. For the 12 months ended in October, prices for final demand less foods, energy, and trade services moved up 2.9 percent.
Final Demand
Final demand goods: Prices for final demand goods moved down 1.4 percent in October, the first decrease since falling 1.5 percent in May. A major factor in the October decline was the index for final demand energy, which dropped 6.5 percent. Prices for final demand foods fell 0.2 percent. Conversely, the index for final demand goods less foods and energy edged up 0.1 percent.
Product detail: Over 80 percent of the October decline in the index for final demand goods is attributable to a 15.3-percent drop in prices for gasoline. The indexes for diesel fuel; hay, hayseeds, and oilseeds; home heating oil; liquefied petroleum gas; and light motor trucks also fell. (In accordance with usual practice, most new-model-year passenger cars and light motor trucks were introduced into the PPI in October.
Final demand services: Prices for final demand services were unchanged in October following six consecutive advances. In October, increases of 1.5 percent in the index for final demand transportation and warehousing services and 0.1 percent in prices for final demand services less trade, transportation, and warehousing offset a 0.7-percent decline in margins for final demand trade
services. (Trade indexes measure changes in margins received by wholesalers and retailers.)
Product detail: Within the index for final demand services in October, prices for airline passenger services rose 3.1 percent. The indexes for chemicals and allied products wholesaling, inpatient care, outpatient care (partial), and truck transportation of freight also increased. Conversely, margins for machinery and vehicle wholesaling declined 2.9 percent. The indexes for apparel, footwear, and accessories retailing; portfolio management; traveler accommodation services; and health, beauty,
and optical goods retailing also fell.
PPI Report Summary:
PPI Expectations (month-over-month): 0.1%, Previous read was 0.4% (Revised from 0.5%)
Actual PPI (month-over-month): -0.5% BELOW EXPECTATIONS
PPI Expectations (year-over-year): 1.9%, Previous read was 2.2%
Actual PPI (year-over-year): 1.3% BELOW EXPECTATIONS
CORE PPI Expectations (month-over-month): 0.3%, Previous read was 0.3%
Actual CORE PPI (month-over-month): 0.0% BELOW EXPECTATIONS
CORE PPI Expectations (year-over-year): 2.7%, Previous read was 2.7%
Actual CORE PPI Expectations (year-over-year): 2.4% BELOW EXPECTATIONS
Stock Market Reaction To PPI Inflation Data For September
The immediate move following the October’s PPI inflation report was a quick move to the upside followed by a drop lower. This drop wasn’t enough to take the S&P 50 ETF (NYSEARCA: SPY) below its previous close nor the Nasdaq ETF (NASDAQ: QQQ). However there may be some concerns underpinning the latest inflation data from October 2023. That has a lot to do with the retail sales figures that were reported for the month.
Retail Sales Report For October 2023
Wall Street was expecting Month-Over-Month sales to come in at -0.3%, which was much lower than the previous month’s read out of 0.9%. However, the actual data came in higher than expected. Although it was in the negative, it was -0.1%. Similarly, expectations for Retail Sales ex Gas/Autos was anticipated at 0.0%, which would be much lower than the previous month’s read of 0.8%. However, the actual numbers, though lower than the prior month, came in higher than anticipated at +0.1% for October.
This data appears to have weighed more heavily on the market inlight of a better than expected October PPI report.
Does this suggest it’s time to clutch your pearls and start going risk-off heading into the end of the year? While that’s yet to be seen, there are plenty of other things to keep track of in the stock market today including penny stocks for those who are active traders.
Most Active Penny Stocks Today
Although the market is giving up some of its gains, there are still plenty of stocks under $5 trading significantly higher.
SirusXM Holdings (NASDAQ: SIRI)
The entertainment company’s stock jumped higher after filings from the Oracle of Omaha, Warren Buffett’s Berkshire Hathaway reported adding 9.68 million shares of SIRI stock valued at roughly $43.77 million. SiriusXM stock has been on our list of penny stocks to watch for weeks following speculation on a pending deal after receiving an offer from Liberty Media Corporation to combine Liberty’s Liberty SiriusXM tracking stock group with SiriusXM.
SciSparc Ltd. (NASDAQ: SPRC)
Shares of the pharma company surged higher on breakthrough news of the company’s results from an investigator-initiated Phase 2a trial of its Alzheimer’s treatment candidate. “We are thrilled with these outcomes, as they signify a monumental potential in enhancing the lives of AD patients. Our commitment to pioneering innovative treatments with a global impact has never been clearer,” said Dr. Adi Zuloff- Shani, Chief Technologies Officer of SciSparc.
Chemomab Therapeutics (NASDAQ: CMMB)
Another one of the biotech penny stocks to watch during premarket trading is Chemomab. The company is also rallying on news. It received FDA Fast Track Designation for its CM-101 in treating primary sclerosing cholangitis. Adi Mor, PhD, co-founder, Chief Executive Officer, and Chief Scientific Officer of Chemomab, explained, “We designed the CM-101 Phase 2 SPRING trial to be supportive of a registrational trial in patients with PSC, and we welcome the enhanced opportunities for working closely with the FDA and for acceleration of the development and review process provided by Fast Track status.”
Heron Therapeutics (NASDAQ: HRTX)
Following an analyst update from Needham, shares of HRTX stock traded higher during Wednesday’s premarket session. The firm maintains a Buy rating on the penny stock and has actually lowered its price target to $4. Despite the drop following Heron’s latest earnings results, the HRTX stock forecast price sits 640% higher than Tuesday’s closing price of $0.54.
