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The Dow and other indices rebounded on Tuesday following inflation data that came in cooler than anticipated. AI stocks that declined sharply on Monday recovered early Tuesday, with Nvidia (NVDA), Super Micro Computer (SMCI), Palantir (PLTR), Micron Technology (MU), and others all rising.
According to the latest Bureau of Labor Statistics report, the Producer Price Index (PPI), which measures wholesale inflation, increased by only 0.2% in December. This figure was lower than the projected rise of 0.4%. Additionally, the Core PPI, which excludes food and energy, remained unchanged.
With that, all eyes are on Wednesday’s consumer price index (CPI) report, which measures retail inflation and will help determine whether or not the Fed will lower interest rates this year.
In the afternoon, the Dow Jones Industrial Average added 218 points, or 0.5%. The tech-heavy Nasdaq and the S&P 500 shed 0.25% and 0.35%, respectively.
The 10-year Treasury yield, which has been rising in the past few days, declined slightly to 4.78%. Oil prices also decreased, with West Texas Intermediate falling by 0.7%, trading around $78.25 per barrel.
This week holds significant events, including earnings reports from JPMorgan Chase (JPM) and Goldman Sachs (GS) on Wednesday, followed by Taiwan Semiconductor (TSM) and UnitedHealth (UNH) on Thursday.
Global bond markets are on the rise
Bond markets are moving upward, with the U.S. 10-year Treasury yield climbing to 4.78% as investors anticipate that the Federal Reserve may delay lowering interest rates until 2026.
This situation has also affected other economies. For instance, Japan, which tried to stabilize the economy and the yen last year, saw its 10-year government bond yield surpass 1%, reaching a 13-year high on Tuesday. Meanwhile, in the UK, 30-year gilt yields are at their highest levels since 1998.
India, which is grappling with currency challenges as the rupee declines, saw its 10-year bond yield experience its biggest single-session rise in over a month on Monday, nearing a two-month high of 6.846%.