Morning Brief
Headline News:
Wholesale prices rose less than expected in May, indicating that pipeline inflationary pressures are percolating higher, the Bureau of Labor Statistics reported Thursday.
The producer price index, a measure of final demand costs, increased seasonally adjusted 1.1% on the month, putting the 12-month wholesale inflation rate at 6.5%. Economists surveyed by Dow Jones had been looking for a 0.7% monthly move.
The annual headline inflation rate was the highest since November 2022.
However, excluding food and energy, so-called core PPI accelerated 0.4%, compared to the consensus view of 0.5%, indicating that rising fuel prices are causing much of the inflationary burden.
(Jeff Cox, CNBC)
Markets:
The S&P 500 declined for a fourth consecutive session, closing at 7,266.99 and breaking below the key support level at 7,333.68. Market internals weakened as the RSI fell below 50 and the Advance/Decline line continued to decline, confirming the recent deterioration in breadth.
Despite the selloff, down volume represented just 67% of total trading volume, suggesting that investors have not yet reached a capitulation point where panic selling typically signals a short-term market bottom.
This morning, a higher-than-expected Producer Price Index (PPI) report and President Trump’s comments regarding a potential escalation of the conflict with Iran have added to investor concerns and weighed on sentiment. S&P 500 futures are trading lower ahead of the opening bell, indicating that selling pressure may persist.
With support at 7,333.68 now breached, attention shifts to the next potential support level at 7,174.12. Should geopolitical tensions or inflation concerns intensify, the index could test that level in the near term.
John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
Partner, DJWMG
Windsor Wealth Planners & Strategists
Futures trading is speculative, leveraged, and involves substantial risks. Investing always involves risk, including the loss of principal, and futures trading could present additional risk based on underlying commodities investments.
The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and changes of price movements.
The percentage of stocks trading above a specific moving average is a breadth indicator that measures internal strength or weakness in the underlying index. The 50-day moving averages are used for short-to-medium-term timeframes, while the 150-day and 200-day moving averages are used for medium-to-long-term ones. Signals can be derived from overbought/oversold levels, crosses above/below 50%, and bullish/bearish divergences.
The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Past performance may not be indicative of future results. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investors’ results will vary. Opinions expressed are those of the author, John N. Lilly III, and not necessarily those of Raymond James. “There is no guarantee that these statements, opinions, or forecast provided herein will prove to be correct. “The information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Investing always involves risk, and you may incur a profit or loss. No investment strategy can guarantee success. The charts and/or tables presented herein are for illustrative purposes only and should not be considered as the sole basis for your investment decision. International investing involves special risks, including currency fluctuations, different financial accounting standards, and possible political and economic volatility. Investing in emerging markets can be riskier than investing in well-established foreign markets.
This is not a recommendation to buy or sell any company’s stock mentioned above.