FX.co ★ US Stocks Drop as Producer Prices Jump Past Estimates

On Thursday, U.S. stocks experienced a downturn, with the S&P 500 and Nasdaq both declining by 0.3%, and the Dow Jones dropping by 180 points. This shift occurred following a Producer Price Index (PPI) report that exceeded expectations, dampening hopes for Federal Reserve interest rate cuts in the upcoming month. July saw producer prices surge by 0.9%—marking the most significant increase in three years and far outpacing the anticipated 0.2% rise. This jump indicates that companies are transferring higher import costs, stemming from tariffs, to consumers. Consequently, the likelihood of a Fed rate cut in September decreased to 90%, down from nearly certain predictions the previous day. The materials sector recorded the most significant losses, while consumer discretionary stocks faced challenges in maintaining gains. On the earnings front, Cisco Systems saw a 0.9% dip after narrowly surpassing expectations, and Deere & Company plummeted by 7.2% following its downward revision of the annual earnings forecast.