Wall Street Wobbles: Producer Prices Signal Economic Uncertainty

Wall Street experienced a downturn on Thursday following a report showing a higher-than-anticipated rise in producer prices, dampening investors' hopes for Federal Reserve interest-rate cuts. The Labor Department's announcement indicated the Producer Price Index climbed 3.3% annually in July, surpassing the 2.5% increase expected by economists. Monthly data showed a 0.9% rise compared to an estimated 0.2%.

Traders have scaled back expectations for Fed rate cuts this year to about 58 basis points, as per LSEG data, down from the previous 63 basis points. However, a quarter-point cut in September remains fully anticipated. Peter Andersen of Andersen Capital Management in Boston noted the mixed economic signals, suggesting inflation might still be a concern despite previous optimism about the economy's state.

At around 09:42 a.m. ET, the Dow Jones Industrial Average dropped 164.29 points, the S&P 500 lost 16.84 points, and the Nasdaq Composite declined by 22.69 points. Recent job data showed fewer Americans filed for jobless benefits last week, but Thursday's report could signal tariff impacts on prices. Nine of the eleven S&P 500 sectors declined, with materials and rate-sensitive stocks among the hardest hit.

(With inputs from agencies.)