Stocks Mixed As Producer Prices Rise Faster Than Expected

U.S. has just released Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims report indicated that 375,000 Americans filed for unemployment benefits in a week, in line with the analyst consensus. Continuing Jobless Claims decreased from 2.98 million to 2.87 million.

The reports indicated that the situation in the job market continued to improve. It is not clear whether good job market reports will be able to serve as material positive catalysts for the stock market as traders are worried about the potential reduction of Fed’s asset purchase program. Strong job reports will likely provide Fed with an opportunity to cut asset purchases in the fourth quarter of this year.

Producer Prices Increased By 7.8% Year-Over-Year In July
U.S. has also released Producer Prices data for July. Producer Prices increased by 1% month-over-month compared to analyst consensus which called for growth of 0.6%. On a year-over-year basis, Producer Prices grew by 7.8% compared to analyst consensus of 7.3%. Core Producer Prices grew by 6.2% year-over-year compared to analyst consensus of 5.6%.

S&P 500 futures are swinging between gains and losses after the release of Producer Prices report. Yesterday’s inflation reports calmed markets as they came in line with the analyst consensus. However, Producer Prices continue to grow which may push inflation higher in the upcoming months and force Fed to reduce its asset purchase program sooner than expected.

WTI Oil Pulls Back While OPEC Reiterates Its Demand Forecast
WTI oil made an attempt to settle above the $69 level but pulled back while OPEC reiterated its oil demand forecast.

OPEC expects that oil demand will increase by 5.95 million barrels per day (bpd) in 2021. In the next year, oil demand is projected to grow by 3.28 million bpd.

It should be noted that OPEC demand forecasts were not changed despite the recent increase in the number of new coronavirus cases, which is bullish for oil and oil-related stocks.

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