S&P 5000

By Nicholas Jasinski |  Thursday, August 12 Prices Rising. Another day, another inflation measure coming in at a vertiginous level. This morning's producer price index showed prices rising 1% in July, above estimates for an increase of 0.6%. It brings the year-over-year increase in producer prices to a whopping 7.8%. Price increases were especially acute in July in reopening-sensitive areas like airfares and used vehicles—up 9.1% and 8.0%, respectively—but were widespread across the index. That will keep the temporary-versus-lasting inflation arguments going for some time yet. Here's Barron's Ben Levisohn writing today: Instead of cooling off, inflation for producers remains hot, hot, hot. That’s in sharp contrast to Wednesday’s consumer price index report, which showed prices rising at a slower pace and bolstering the Federal Reserve’s argument that price increases were transitory. Now, the market will have to contend with another month of arguments about whether inflation is here to stay or not. As for the companies being forced to pay those higher input prices, so far the impact hasn't been bad. S&P 500 profit margins have been coming in near record levels this past earnings season, as strong demand from consumers has made passing along those costs possible. “At a time when input costs (including for labor) are rising rapidly, for wholesalers and retailers to be widening their margins so sharply says a lot about the degree of pricing power that they currently enjoy,” wrote Amherst Pierpont chief economist Stephen Stanley​ today. “That is probably the most powerful argument against the Fed’s ‘transitory’ narrative.” We'll next hear from Fed officials at the 2021 Jackson Hole Economic Symposium in two weeks. Expect inflation and tapering to continue to dominate the conversation until then. The S&P 500 and Dow Jones Industrial Average ticked up to all-times highs today, adding 0.3% and less than 0.1%, respectively. The Nasdaq Composite rose 0.3%, and is about half a percentage point below record levels. All three have returned at least 15% since the start of this year.

 

DJIA: +0.04% to 35,499.85 S&P 500: +0.30% to 4,460.83 Nasdaq: +0.35% to 14,816.26 The Hot Stock: Organon +11.9% The Biggest Loser: Western Digital -6.5% Best Sector: Healthcare +0.8% Worst Sector: Industrials -0.2%