Stocks Slip in Early Trading on Hot PPI Inflation Report After Two Days of Record Highs for S&P 500

Stocks were slightly lower in early trading Thursday after a closely watched inflation report revived concerns about the impact that tariffs are having on the economy.

The Dow Jones Industrial Average was down 0.4% in recent trading, while the S&P 500 and Nasdaq Composite slipped 0.2% and 0.1%, respectively. Stocks are coming off a winning session on Wednesday, when the benchmark S&P 500 closed at a record high for the second straight day, while the tech-heavy Nasdaq finished at a record for the fourth time in the last five sessions. The Dow entered today’s session just 0.2% away from its first new high since December.

Stocks got a boost earlier this week from consumer price data that showed inflation held steady in July, news that reinforced market expectations that the Federal Reserve will be in a position to cut interest rates at its next policy meeting in September. This morning, however, the Producer Price Index report showed that wholesale inflation in July was considerably hotter than economists had expected. The latest inflation news tempers, at least temporarily, the hopes for rate cuts, as the Fed would be reticent to adjust policy if inflation pressures are building.

Shares of the world’s largest technology companies, which have an outsized influence on the broader market, were mixed in early trading. Amazon (AMZN) shares were up 2%, while Broadcom (AVGO) added 1%, and Microsoft (MSFT), Alphabet (GOOG) and Meta Platforms (META) inched higher. Nvidia (NVDA), Apple (AAPL) and Tesla (TSLA) ticked lower.

Among the big movers this morning, Deere (DE) shares dropped more than 6% after the agricultural machinery maker released its quarterly results, while Coach parent Tapestry (TPR) tumbled 16% after a disappointing earnings report.

The yield on the 10-year Treasury, which affects borrowing costs on a wide array of consumer and business loans, was at 4.26% recently, up from 4.20% before the inflation numbers were released. The yield fell as low as 4.18% last week, its lowest level since early May, as market expectations for interest rate cuts by the Fed increased after a weak July jobs report.

Bitcoin was trading at $118,500 this morning, after surging to a record high overnight of $124,500. The digital currency surpassed its previous high of $123,200 set about a month ago.

The U.S. dollar index, which measures the performance of the dollar against a basket of foreign currencies, was up 0.3% at 98.13, after hitting its lowest level in nearly three weeks yesterday.

West Texas Intermediate futures, the U.S. crude oil benchmark, rose 1.4% to $63.55 per barrel, rebounding after a two-week slump that has taken prices to their lowest levels since early June. Gold futures were down 0.3% at $3,400 an ounce.