Market Rebound: AI Stocks Recover Amid Cooler Inflation Data
The stock market breathed a sigh of relief on Tuesday as inflation data came in lower than expected, sparking a rebound in AI stocks that had taken a hit on Monday. Nvidia, Super Micro Computer, Palantir, Micron Technology, and others led the charge, posting significant gains.
Inflation Data: A Mixed Bag
According to the latest Bureau of Labor Statistics report, the Producer Price Index (PPI) rose by a modest 0.2% in December, falling short of the projected 0.4% increase. Meanwhile, the Core PPI, which excludes food and energy, remained flat. This mixed bag of data has set the stage for Wednesday’s highly anticipated consumer price index (CPI) report, which will provide a clearer picture of retail inflation and its implications for interest rates.
Indices and Commodities: A Day of Ups and Downs
The Dow Jones Industrial Average surged 218 points, or 0.5%, in the afternoon, while the tech-heavy Nasdaq and the S&P 500 shed 0.25% and 0.35%, respectively. The 10-year Treasury yield, which had been on the rise, dipped slightly to 4.78%. Oil prices also took a hit, with West Texas Intermediate falling by 0.7% to trade around $78.25 per barrel.
Earnings Season Heats Up
This week promises to be a busy one, with earnings reports from JPMorgan Chase and Goldman Sachs scheduled for Wednesday, followed by Taiwan Semiconductor and UnitedHealth on Thursday. As investors digest the latest inflation data, all eyes will be on these reports to gauge the health of the economy.
Global Bond Markets: A Story of Rising Yields
Bond markets are on the move, with the U.S. 10-year Treasury yield climbing to 4.78% as investors bet on the Federal Reserve delaying interest rate cuts until 2026. This trend is not limited to the U.S., as Japan’s 10-year government bond yield surpassed 1% to reach a 13-year high, while the UK’s 30-year gilt yields hit their highest levels since 1998. In India, the 10-year bond yield experienced its biggest single-session rise in over a month, nearing a two-month high of 6.846%.
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