Nasdaq Composite and Dow Jones Industrial Average Gain 400+ Points as Market Lauds Tame PPI
Stocks closed solidly higher Tuesday, with the $Nasdaq Composite Index (.IXIC.US)$ and $Dow Jones Industrial Average (.DJI.US)$ both adding 400+ points as Wall Street liked Produce Price Index data that pointed to tame U.S. inflation that could open the door to Federal Reserve interest-rate cuts.
The Nasdaq added 407 points (2.4%) to close at 17,187.61, while the DJIA rose 408.63 ticks (1%) to 39,765.64. Meanwhile, the $S&P 500 Index (.SPX.US)$ gained 90.02 points (1.7%) to a 5,434.41 finish.
Equities rose after the U.S. Bureau of Labor Statistics reported before the bell that the PPI -- which measures wholesale inflation -- gained only 0.1% in July, less than the 0.2% that economists had forecast. The BLS plans to release the July Consumer Price Index, which measures inflation at the retail level, on Wednesday at 8:30 a.m. ET.
The modest PPI helped reignite hopes that the Federal Reserve will soon cut interest rates, possibly as early as its regularly scheduled Sept. 17-18 meeting. Lower rates historically help stocks by reducing the interest rates that bonds and money-market funds pay.
Tuesday's big stock gainers included:
-- $Starbucks (SBUX.US)$ which soared 24.5% on news that the coffee chain is replacing CEO Laxman Narasimhan with Chipotle CEO Brian Niccol. $Chipotle Mexican Grill (CMG.US)$ sank 7.5% on the news.
-- $EchoStar (SATS.US)$, which rebounded 12.6% after several days of losses following release last Friday morning of poorly received quarterly earnings. However, the satellite firm's stock remains 13.1% below where it closed Thursday before the numbers came out.
Decliners of note included:
-- $Tencent Music (TME.US)$, which shed 15.3% on word of declining yearly revenues and fewer mobile monthly active users.
-- $B. Riley Financial (RILY.US)$, which lost 11.4% after falling more than 50% on Monday following suspension of its dividend and word that regulators have subpoenaed its record.
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Former top editor at Seeking Alpha, Fidelity.com, TheStreet.com and UPI.
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