After suffering a significant decline on Wednesday, Wall Street tried to shake off another hot inflation number on Thursday morning.
The Producer Price Index, a measure of the average change over time in the selling prices received by domestic producers for their products, rose 0.6% in April and 6.2% on a year-over-year basis, according to the U.S. Bureau of Labor Statistics.
That's the most significant increase since November 2010.
Services like portfolio management, airline passenger services, food retailing, fuels and lubricants retailing and physician care registered the highest gains, followed by building materials and supplies retailing.
Nonetheless, major equity markets headed north. On Thursday morning, the S&P 500 futures were trading at 4,070.30, up 0.29% from the previous closing, while the Dow Jones futures were trading at 33,520.17, up 0.08%. The tech-heavy Nasdaq was trading at 13,92.10, up 0.72% from the previous close.
These gains were held once the market opened, with Nasdaq rallying around 1.5% an hour after the market opened.
That's a big difference from Wednesday morning, when all major indexes were trading lower following the Consumer Price Index release, which registered a 4.2% increase in April, up from 2.6% in March, the highest reading since September of 2008.
What's behind this shift in Wall Street sentiment? The obvious answer is bargain hunting. After a three-day losing streak, valuations came down, making big tech names with strong earnings more appealing.
Then there's the realization that the hot inflation numbers of the last three months follow a streak of cold numbers in the previous spring in the midst of the pandemic. And that makes the recent numbers "unusually large and transitory," to use the Federal Reserve's terminology.
At least that seems to be the case in the bond market today, where the 10-year U.S. Treasuries gave back some of the yield gains they made yesterday.
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