Stock market today: Wall Street mixed after pickup in wholesale inflation

Stocks are mixed on Wall Street in morning trading Friday, as investors review reports on inflation and consumer sentiment for clues about the Federal Reserve’s next move on interest rates.

The S&P 500 was down 0.2% after spending much of the morning wavering between small gains and losses. The benchmark index is still on pace for its second losing week in a row.

The Dow Jones Industrial Average was up 79 points, or 0.2%, at 35,254, as of 11:07 a.m. Eastern time. The Nasdaq composite was 0.6% lower, reflecting a pullback in big tech companies.

Stocks lost ground in the early going after the Labor Department reported Friday that its producer price index, which measures inflation before it hits consumers, rose 0.8% last month from July 2022. The latest figure followed a 0.2% year-over-year increase in June, which had been the smallest annual rise since August 2020.

While modest, the increase in wholesale prices last month could help persuade the Federal Reserve that its work on bringing inflation to heel isn’t done.

“Not surprisingly, today’s report offers the hawkish wing of the Fed more ammunition to advocate for another rate hike before the Fed is convinced it’s reached its terminal rate,” said Quincy Krosby, chief global strategist for LPL Financial.

Bond yields mostly rose, including the two-year Treasury yield, which climbed to 4.86%. The yield, which closely tracks expectations for the Fed, initially jumped to 4.88% from 4.80% right after the report’s release.

The yield on the 10-year Treasury rose to 4.13% from 4.10% late Thursday. It helps set rates for mortgages and other important loans.

The wholesale prices data follows Thursday’s release of the government’s consumer price index, which showed U.S. consumers paid prices that were 3.2% higher in July than a year earlier. That’s a touch milder than the 3.3% inflation rate economists expected to see and down sharply from last summer’s peak above 9%. Underlying trends for inflation were also within expectations.

By all measures, inflation has cooled over the past year, though it remains above the Fed’s 2% target level. The moderating pace of price increases, combined with a resilient job market, has raised hopes that the Fed may achieve a difficult “soft landing”: Raising rates enough to slow borrowing and tame inflation without causing a painful recession.

Such hopes helped the S&P 500 rally a big 19.5% through the first seven months of the year, though critics say Wall Street too quickly formed a consensus that inflation is continuing to cool, the economy will avoid a recession and the Fed has already hiked rates for the final time this cycle.

The Fed has said it will make upcoming decisions on rates based on what data reports say, particularly those on inflation and the job market. Its main rate is already at its highest level in more than two decades.

Traders also weighed a preliminary reading in a University of Michigan survey that showed consumer sentiment down slightly from July, when it climbed to its highest level since October 2021. The latest consumer sentiment index was 71.2, down from 71.6 in July and below analysts’ consensus forecast of 71.3, according to FactSet.

Among its findings, the latest survey found that consumers’ expectations for inflation in the coming year edged lower. That’s good news, as the Fed has been adamant about wanting to avoid a vicious cycle where expectations for high inflation drive behavior that only worsens it.

Investors also had their eye on the latest batch of quarterly earnings reports.

IonQ jumped 20.9% after the quantum computing technology company raised its full-year guidance after its fiscal second-quarter revenue topped Wall Street’s forecasts.

Flowers Foods rose 3% after price increases helped drive the bakery goods maker’s latest quarterly earnings and revenue, beating analysts’ projections.

Traders hammered Cano Health, sending its shares 67.1% lower, after the chain of primary care medical centers reported quarterly results that fell short of Wall Street’s estimates and said it believes its current liquidity isn’t enough to cover the next 12 months.

Several major retailers are set to report quarterly results next week, including Home Depot on Tuesday, Target on Wednesday and Walmart on Thursday.

In stock markets abroad, indexes declined in Europe and mixed in Asia.