The stock market receives “panties” from stunning inflation reports, initially TheStret appeared.
The stock was very much wondering, in part, given the argument that Trump’s administration’s rates on inflation would be lower than feared earlier this year.
However, in July, the manufacturer’s price index, which measures wholesale prices of goods, called it that thinking.
Although the consumer level inflation, measured by the consumer price index and the personal consumption expenditure index, noted only a slightly higher, the inflation in July increased far more in July than the economists expected.
Price pressure on the factory gate is often seen as a precursor to consumer inflation, which indicates that CPI and PCE data may deteriorate in the next month or two.
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If so, it would not be a great news for shares that work best when households and companies feel out of cash, not cash.
Wholesale inflation increased more than expected
The Federal Reserve Bank does not directly control how much your bank will charge you for a credit card, mortgage or automatic loans, or promotions will increase or decrease.
However, the norm of federal funds determines how much banks charge each other when they lend reserves overnight. Thus, changes (and expected changes) Fed interest rates and the resulting impact on the basic interest rate and treasury income, influence the amount of buyers and the company pay interest and have left to spend.
Related: Bank of America follows weapons due to Fed interest rate forecasts
This affects economic activities, which in turn influences corporate income and income growth, which is vital to higher stock prices.
As a result, investors closely monitor the Fed monetary policy.
The Central Bank decides its monetary policy based on economic data, especially on jobs and prices that allow you to balance your double powers to promote low unemployment and inflation.
So far, the data has led to the Fed 2025. Sit in your hands, leaving unchanged rates because of concern that the rates will cause inflation to the spike.
However, investors have increasingly modeling the final reduction of tariffs, hoping that negotiations on trading will reduce effective rates more than expected this spring, thus maintaining stock prices and eventually lower rates.
Those hopes have been strengthened after recently weak jobs, so most predict that Fed will reduce tariffs in September by increasing higher GDP, sales and earnings.
Unfortunately, the July PPI report could include a monkey wrench to that optimism.
Based on July in July, according to the Bureau of Statistics Bureau, which creates an inflation report. PPI increased by 0.9% – the most significant leap from 2022. June Economists expected to increase by 0.2%.
In general, PPI inflation increased by 3.3%over the year. The final demand index, minimizing his volatile food, energy and trade services, increased by 2.8% in recent years, “July increased by 0.6% – the highest increase from 0.9% increased in March 2022,” the BLS report states.
More economic analysis:
“In July, PPIs exploded upwards, leaving Powell bound and expected tariff reducing,” wrote longtime Wall Street analyst Stephen Guilfoyle in Thestreet Pro.
“What can only be called panties to anyone who expects (or betting) due to aggressive tariffs to reduce the resolution of the Federal Open Market Committee policy on 17 September, this was a rude awakening.”
The average annual return on the S&P 500 has been around the 1960s, but the reference index from April 9. Decreased by 28% from April 9.
The profit was ruthless, so many investors took it out of the market. As a result, the S&P 500 evaluation was, of course, stretched and may be perfection price.
Related: Fed Governor requires a reduction in several interest rates
S&P 500 prices and revenue from many, the main assessment tool investors use to determine whether stocks are cheap or expensive, increased by more than 22. This is a flirt with a level that was last seen almost in February, before decreased due to tariffs.
Historically, P/E repeated after a year did not make significant profits, which indicates that income will have to grow faster than prices if stock continues to move up.
Any delay in evaluating a reduction that could lead to GDP and profit growth would be undesirable.
“July’s manufacturers’ prices just burst up. There is no possibility of that sugar coating,” Guilfoyle said. “If this is not changed or viewed in a colder direction when it was released in August in August, Fed has all the ammunitions it needs to be more cautious, and the Fed chair Jerome Powell looks much less stupid than I thought he had.”
Currently, the CME Fedwatch tool, which follows the speed of speed reduction based on future transactions markets, still shows that September and October are still decreasing. However, the likelihood of one third of the cutting decreased dramatically.
“The reduction of the third quarter point, which was priced in December before this show, was now transferred to April. This is a big deal,” Guilfoyle said.
Related: Treasury Secretary Sends a blunt message to Pelosi, Congress
The stock market receives “panties” from stunning inflation reports, first appeared in TheStreet in 2025. August 14
Initially, the story was reported by Thestret in 2025. August 14, where she first appeared.
