U.S. stock markets moved higher on Wednesday, supported by softer inflation data and a fresh batch of corporate earnings reports.
As of 09:35 ET, the Dow Jones Industrial Average was up 110 points, or 0.3%. The S&P 500 gained 12 points (0.2%), while the NASDAQ Composite added 10 points, or 0.1%.
Producer Prices Remain Flat in June
Inflation at the producer level remained subdued in June. The Producer Price Index (PPI) was unchanged from the previous month, marking a slowdown from May’s 0.3% increase. On an annual basis, prices rose 2.3%, down from 2.7% in May, according to the Labor Department.
The softer inflation reading came in below economists’ expectations, which had forecast a 0.2% monthly gain and 2.5% annual rise. A decline in travel accommodation costs helped counteract rising prices for final demand goods.
The data followed Tuesday’s Consumer Price Index (CPI) report, which showed a 2.7% year-over-year rise in consumer prices—slightly above expectations of 2.6% and up from 2.4% in May. Monthly CPI rose 0.3%, in line with forecasts.
Fed’s Beige Book and Stagflation Concerns
Investors are also awaiting the latest edition of the Federal Reserve’s Beige Book, due later today. The report compiles anecdotal insights from across the U.S. economy and is closely watched for signs of emerging trends.
Analysts at Vital Knowledge noted, “The Beige Book has gained added significance in this environment, likely reflecting continued stagflationary dynamics—where growth slows while price pressures persist, driven in part by trade disruptions.”
Trade Policy Still a Source of Volatility
Trade tensions continue to create uncertainty. On Tuesday, President Donald Trump reaffirmed his intent to impose a 200% tariff on pharmaceutical imports by the end of the month, coinciding with the rollout of other previously announced tariffs.
Additionally, Trump announced a new 19% tariff on goods from Indonesia, part of a broader trade deal with the Southeast Asian nation. This follows framework agreements recently announced with the United Kingdom, China, and Vietnam. The White House has set an August 1 deadline for the implementation of its so-called “reciprocal” tariffs, emphasizing it will not delay the timeline again.
Bank Earnings Season Heats Up
Markets also reacted to a wave of second-quarter earnings reports from major banks. While JPMorgan Chase (NYSE: JPM), Citigroup (NYSE: C), and Wells Fargo (NYSE: WFC) beat analyst estimates on Tuesday, the market response was mixed.
JPMorgan CEO Jamie Dimon expressed caution about the economic outlook, citing risks tied to trade policies and a rising fiscal deficit.
Meanwhile, Bank of America (NYSE: BAC) shares rose after stronger trading revenue lifted second-quarter profits. Goldman Sachs (NYSE: GS) also reported better-than-expected earnings, driven by record equities trading revenue and a rebound in dealmaking.
Morgan Stanley (NYSE: MS) shares slipped, despite solid earnings growth as market volatility boosted trading results.
Outside the banking sector, Johnson & Johnson (NYSE: JNJ) gained after raising its full-year sales outlook, though investors remain wary of potential U.S. tariffs affecting some of its imports.
Oil Prices Extend Declines
Crude prices continued to slide on Wednesday, adding to losses earlier in the week. By 09:35 ET, Brent crude fell 1.1% to $67.94 a barrel, while U.S. West Texas Intermediate (WTI) dropped 1.3% to $65.66.
Despite tariff threats from President Trump, including potential levies on Russian oil purchases, the market appeared to discount near-term supply disruption risks.
The Organization of the Petroleum Exporting Countries (OPEC) maintained its demand forecast for 2025 and 2026, expressing optimism that trade tensions may.
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