It’s inflation data week, because the markets await the discharge of the April Consumer Price Index (CPI) reading on Wednesday. On Tuesday, the Bureau of Labor Statistics (BLS) issued the Producer Price Index (PPI), which is a measure of the change in prices that manufacturers or producers of products and services sell their products for.
The April PPI rose 0.5% after falling 0.1% in March. The 0.5% increase in PPI for final demand was barely lower than February, when it gained 0.6%. The ultimate demand for services climbed 0.6%, probably the most since July 2023, while prices for final demand goods gained 0.4%.
Further, the 12-month change in final demand was 2.2%, up from 1.8% in March. It’s the largest jump since April 2023, when the reading rose 2.3%.
Moreover, final demand excluding food, energy and trade jumped 0.4% in April after rising 0.2% in March. The 12-month change in final demand, less food, energy and trade, was 3.1%, the largest jump since April 2023, when it rose 3.4%. This is taken into account a very important measure because it excludes more volatile food, energy and trade prices.
The PPI increase was higher than projected by economists, who predicted a 0.3% gain in April. While the PPI is commonly considered a predictor of the CPI, that is just not at all times the case as there are variables that may result in different movements by the 2 gauges.
Markets unmoved, but meme stock rally continues
The markets didn’t react negatively to the spike in PPI, as all of the key indexes were trending higher on Tuesday morning. Partially, concerns in regards to the PPI could have been offset by the resurgence in meme stocks, which proceed to climb higher.
On Monday, GameStop (NYSE:GME) gained greater than 70%, fueled by the apparent return of the investor known online as Roaring Kitty, aka Keith Gill, who led the meme stock surge in 2020 and 2021. The initial focus was on pumping GameStop stock, however the exuberance soon spread to other meme stocks, like AMC Entertainment (NYSE:AMC).
Each GameStop and AMC were roaring higher again on Tuesday, with GameStop surging 80% to about $55 per share and AMC skyrocketing 95% to over $10 per share as of Tuesday morning. Because the close of the market on Friday, GameStop has gained some 215% while AMC is up some 250%. Investors must be extremely cautious with any stock with this level of volatility without the company earnings to back it up.
The opposite big news on Tuesday is fresh commentary from Federal Reserve Board Chair Jerome Powell, who’s speaking in Amsterdam to the Foreign Bankers’ Association. More on that because it develops.