Markets slide after a warm inflation report and tech shares slip lower

Dow crawled up 16. decliners over advancers better than 3-2 & NAZ slid back 37.  The MLP index added 2+ to the 303s & the REIT index rose 3 to the 421s following recent weakness.  Junk bond funds were mixed & Treasuries had a little selling, allowing yields to slip lower.  Oil dropped 1 to the 69s as IEA sees global market ‘comfortably supplied’ next year & gold sank 55 to 2701.

Dow Jones Industrials

A measure of wholesale prices rose more than expected in Nov as questions percolated over whether progress in bringing down inflation has slowed, the Bureau of Labor Statistics (BLS) reported.  The producer price index (PPI) which measures what producers get for their products at the final-demand stage, increased 0.4% for the month, higher than the estimate for 0.2%.  On an annual basis, PPI rose 3%, the biggest advance since Feb 2023.  However, excluding food & energy, core PPI increased 0.2%, meeting the forecast.  Also, subtracting trade services left the PPI increase at just 0.1%.  The year-over-year increase of 3.5% also was the most since Feb 2023.  In other economic news, the Labor Dept reported that first-time claims for unemployment insurance totaled a seasonally adjusted 242K last week, considerably higher than the 220K forecast & up 17K from the prior period.  On the inflation front, the news was mixed.  Final-demand goods prices leaped 0.7% on the month, the biggest move since Feb of this year.  80% of the move came from a 3.1% surge in food prices, according to the BLS.  Within the food category, chicken eggs soared 54.6%, joining an across-the-board acceleration in items such as dry vegetables, fresh fruits & poultry.  Egg prices at the retail level swelled 8.2% on the month & were up 37.5% from a year ago in a separate report yesterday on consumer prices.  Services costs rose 0.2%, pushed higher by a 0.8% increase in trade.

Wholesale prices rose 0.4% in November, more than expected

The economy is doing "exceptionally well" as Pres-elect Donald Trump gets ready to enter the White House, according to Moody's Analytics chief economist Mark Zandi.  Zandi, speaking at the Consumer Federation of America's financial services conference, noted some of the glowing areas: Gross domestic product has been growing at around 3%, productivity & business formation rates are strong & the stock market is up.  "The economy can weather a lot of storms," Zandi added.  But, he added, "I do think there are some potential storms coming" next year under the new administration.  Zandi expects Trump to act quickly on deporting immigrants & implementing tariffs, 2 moves that could have profound impacts on the US economy.  "I believe President Trump is going to do what he said he'll do on the campaign trail," Zandi continued.  "He's going to be quite aggressive in pursuing the policies."  Immigration has played a big role in the economy's strength, Zandi said.  Others agree.  "Recent immigrants have flowed disproportionately into the parts of the labor force that were particularly tight in 2022, contributing to labor supply in places where it was most badly needed," Goldman Sachs analysts wrote in May.

Economy faces 'some potential storms' in 2025, Moody's chief economist says

Americans this holiday season say they are seeing a ghost of Christmas past: inflation.  The CNBC All-America Economic Survey finds inflation is still haunting the buying public, leading to what's shaping up to be just an average season for retailers.  Just 16% of respondents say they will spend more, down 2 points compared to last year & 48% said that they'll lay out the same amount for holiday gifts, up 5 points.  At the same time, 35% say they'll spend less, down 2 points as well.  The survey of 1002 Americans nationwide was conducted Dec 5-8 by Hart Research in conjunction with Public Opinion Strategies, the Rep pollsters for the survey.  It has a margin of error of +/- 3.1%.  When it comes to prices, 64% say they are higher this year compared to last for their holiday gifts, with 34% saying they are much higher.  More than a qtr of participants say they are about the same & just 4% are seeing lower prices.  The result: average spending per person comes in at $1014, about typical for the past several years, but down from a large outlying number of $1308 in 2023.  Older & lower-income Americans & women aged 18-49 are those most likely to say they’ll spend less.  At 36%, inflation tops the list of reasons cited by those spending less.  More than 1 in 5 say it's because they have less income & 20% report it's because they have trouble paying their bills.  In all, 46% of Americans say they have arrived at the holiday season with a some or a lot of debt & they also plan to spend less than most.  Among those spending more are younger Americans aged 18-34, as well as those living in urban counties & Latinos.  Of those who are spending more, 37% say it’s because their incomes are higher, but that's followed by 25% who cite higher prices.  “Inflation is still really on people’s minds,″ said Jay Campbell, partner at Hart Research, who served as the Dem pollster for the survey.  He said the data show, “To the degree inflation has an effect, it is a pushing down spending more than pushing up spending.”  Another factor for shoppers to negotiate this season: Thanksgiving fell on Nov 28, the latest date possible, meaning a shorter season.  The survey found that about ½ of Americans have done less than ½ or none of their shopping when the poll was taken.  A 3rd said they had done none at all.

Only 16% of holiday shoppers plan to spend more this season, CNBC survey shows

Investors received a piece of the inflation puzzle today, an update on wholesale prices, after the latest consumer inflation data invigorated stocks yesterday.  The PPI raised investors' concerns about a rate cut at the Fed's meeting next week.