It is inflation data week, as the markets await the release of the April Consumer Price Index (CPI) reading on Wednesday. On Tuesday, the Bureau of Labor Statistics (BLS) issued the Producer Price Index (PPI), which is a measure of the change in prices that manufacturers or producers of goods and services sell their products for.
The April PPI rose 0.5% after falling 0.1% in March. The 0.5% increase in PPI for final demand was slightly less than February, when it gained 0.6%. The final demand for services climbed 0.6%, the most since July 2023, while prices for final demand goods gained 0.4%.
Further, the 12-month change in final demand was 2.2%, up from 1.8% in March. It is the biggest jump since April 2023, when the reading rose 2.3%.
Additionally, final demand excluding food, energy and trade jumped 0.4% in April after rising 0.2% in March. The 12-month change in final demand, less food, energy and trade, was 3.1%, the biggest jump since April 2023, when it rose 3.4%. This is considered an important measure as it excludes more volatile food, energy and trade prices.
The PPI increase was higher than projected by economists, who predicted a 0.3% gain in April. While the PPI is often considered a predictor of the CPI, that is not always the case as there are variables that can lead to different movements by the two gauges.
Markets unmoved, but meme stock rally continues
The markets did not react negatively to the spike in PPI, as all of the major indexes were trending higher on Tuesday morning. In part, concerns about the PPI may have been offset by the resurgence in meme stocks, which continue to climb higher.
On Monday, GameStop (NYSE:GME) gained more than 70%, fueled by the apparent return of the investor known online as Roaring Kitty, aka Keith Gill, who led the meme stock surge in 2020 and 2021. The initial focus was on pumping GameStop stock, but the exuberance soon spread to other meme stocks, like AMC Entertainment (NYSE:AMC).
Both GameStop and AMC were roaring higher again on Tuesday, with GameStop surging 80% to about $55 per share and AMC skyrocketing 95% to over $10 per share as of Tuesday morning. Since the close of the market on Friday, GameStop has gained some 215% while AMC is up some 250%. Investors should be extremely cautious with any stock with this level of volatility without the corporate earnings to back it up.
The other big news on Tuesday is fresh commentary from Federal Reserve Board Chair Jerome Powell, who is speaking in Amsterdam to the Foreign Bankers’ Association. More on that as it develops.
