US Recap – Nasdaq Hits All Time High, Russell 2000 Leads, As Markets Await CPI

Despite a higher than expected core PPI print yesterday, US indices rallied through the afternoon and propelled the Nasdaq composite index to a new height.

The recent performance of the US markets has cast a long shadow that other global equities often step into, and the wait for inflation data has been palpable.

In the US trading session Tuesday, all the major indexes ended the day green, with some notable successes. The S&P 500 index rose 0.48%, finishing the day at 5,246.68, the Dow Jones Industrial Average saw an increase of 0.32% to 39,558.11, the Russell 2000 added an impressive 1.14%, ending Tuesday at 2,085.69, and perhaps most notably, the Nasdaq Composite hit new all time highs before settling the day with 0.75% gains at 16,511.18.

Tensions around inflation have persisted, especially with the April core producer price index (PPI) in the U.S. climbing to 0.5%, overshooting predictions of 0.2%. This data indicates that prices at the wholesale level remain stalwart, stirring concerns regarding inflation's trajectory. Federal Reserve Chair Jerome Powell has signalled that the central bank is not inclined to increase its key interest rate as a reflex to inflation pressures in the short term.

The market is now turning its attention to the upcoming consumer price index (CPI) update. Economists are foreseeing a dial down of inflation, projecting an ease to 3.4% year-over-year for April. These predictions are critical, as they will likely play a vital role in the Federal Reserve's strategy for managing the economy going forward.

On the street and in the markets, meme stocks such as GameStop and AMC Entertainment have seen notable rises, reflective of the unpredictable waves of 2021’s retail trading frenzy. While these gains were not wholly sustained into the day's close, their significant movements have been a highlight in the tech-driven market surge.

A rallying Wall Street bracing for significant inflation data can be a relatively dangerous ground. Markets around the globe will be watching closely as consumer price insights emerge, potentially providing clues to the monetary policy roadmap and its impact on stock valuations and global economic health.