00:00 Speaker A
The market rallying stalling after new data showing wholesale prices rising higher than expected in July. For that and other trading day takeaways. Let's bring in our Yahoo Finance senior reporter, Ali Canal. Ali
00:13 Ali
Yeah, but despite that PPI print, we basically saw markets close flat, the S&P closing slightly above the flat line. That means we have a new record high. So in a lot of ways it feels like markets are digesting this news and basically accepting the fact that in the near term, we're going to be seeing some increased inflation. However, the why is very important. So we did see producer prices hit a three-year high, coming in way above expectations. But we did see services, those components rising for PPI. This is similar to what we saw with the CPI print the other day. And that's a problem for the Fed, because even if they look through tariffs as a one-time price increase for goods, if services is rising where predominantly services oriented economy, that means something else is happening under the hood. So that is what economists have been talking about today and that's really the main pain point looking ahead. Still, markets continue to expect the Fed to cut interest rates here just around 90%. Didn't change all that much, maybe a tiny bit less conviction, but overall, there seems to be this expectation that come September, we are going to get an interest rate cut. The general consensus seems to be if we do see a rate cut, it's going to be 25 basis points, not a jumbo 50 like we saw last year, and the market environment is a bit different now too, right? I mean, interest rates are 100 basis points lower this time around than they were last year. We still have that weakening labor market, but the immigration controls, that's something that the Fed is going to have to take into account as well when we look at that unemployment rate.
02:40 Speaker A
Yeah, so basically, I mean, markets looked at the CPI print, the PPI print, and said, okay, there's nothing here that derails that cut that they bet is coming next month.
03:00 Ali
Right. And it'll be interesting to see if we don't see the Fed cut and we've been having, you know, different opinions there from actual Fed officials. They've been coming out and speaking, and not everyone is convinced that they need a cut right now.
03:17 Speaker A
It is interesting your point, you think somebody would be leaning harder into the cut than they sound like they are.
03:31 Ali
Yeah, they've really much seem to be on the fence here. So that's something that I'm going to be focused on. We have Jackson Hole next week. Jerome Powell's been very good at telegraphing where he thinks the Fed is going to go. So I could see maybe these rate cut odds changing. But from there, I also want to take a look at crypto, because we know that crypto has been just a big outperformer this year. But today, we saw basically all of the tokens take a leg lower here. Bitcoin down 4%. Same with Ethereum. Now I will say this comes after Bitcoin hit an all-time high really early this morning. Maybe it's some profit taking. Maybe it's the fact that we were a little
04:19 Speaker A
Best made some headlines too.
04:21 Ali
Yeah, maybe a little more risk off in markets overall as well. But still, if you take a look year to date, Bitcoin prices have just been on an absolute tear. And this comes as the administration has really embraced crypto at large. And it's not just retail enthusiasm, it's the institution side as well. And we've seen really successful IPOs with stable coins, really any company that touches crypto touches tokenization. They've done really well. Bullish too, it's a crypto exchange owner. I believe that stock closed up around 9% today after that successful IPO. So overall, even though the rally fizzled a little bit today, I think there's still a lot of tailwinds.
05:11 Speaker A
Trump and that friendlier regulatory backdrop that that's not hurting either, right?
05:19 Ali
Right, exactly. And then finally, let's take a check on market breadth. So this is something that we're continuing to watch as we really monitor this market rally. And yesterday we saw small caps rise about 2%. That's the Russell 2000 index. This was the highest level that we've seen in about six months here. And if you take a look at it year to date, you can see this steady rise up. Now today, the equal weighted S&P 500 underperformed the benchmark S&P. So this shows us that most of the smaller companies, they weren't doing too well today. We've really saw those large cap companies leading the way higher here. But overall, it's that's starting to narrow. We are starting to see more broad participation, and that is really critical when we talk about the sustainability of this rally, because you don't want a market that is really top heavy and just concentrated in those top seven names. You really want a lot more dispersion there. And we have been seeing that over the past several months and you can see here year to date we're up around 6% for the equal weight.
06:50 Speaker A
Yeah, we had Caleb Silver on the show to ask him, what are the vibes like over investor PD? Strong, he said, and that helps.
07:00 Ali
A lot of optimism.
07:02 Speaker A
Thank you. Thank you, Ali.
