Closing Recap 

U.S. stocks finished mostly flat in a mixed session, as a surprisingly hot producer price inflation report sent Treasury yields and the dollar higher, weighing on broader market sentiment but failing to derail strength in mega-cap tech; small caps were the notable laggard. 

Key Takeaways 

• Hot PPI Data Shakes Markets: A much hotter-than-expected July Producer Price Index (PPI) report (headline & core both +0.9% m/m) raised inflation concerns and challenged the narrative of imminent Fed rate cuts. 
• Markets Finish Flat, Tech Resilient: Despite the inflation shock, the S&P 500 and Dow finished near unchanged, while the Nasdaq was flat, showcasing the market’s resilience and the continued strength of mega-cap tech. 
• Yields & Dollar Jump: Treasury yields rose across the curve (10-yr +5.3 bps), and the U.S. dollar index gained on the PPI data as rate cut odds for September, while still high, saw some trimming. 
• Gold & Crypto Fall: Gold prices and cryptocurrencies like Bitcoin declined as the stronger dollar and higher yields provided significant headwinds. 
• Narrow Leadership Continues: The market’s advance remains highly concentrated in a handful of mega-cap tech stocks, which are offsetting broader market weakness. 
• Sentiment Wanes: Investor sentiment showed signs of caution, with the AAII survey turning more bearish and NAAIM exposure declining. 
• Focus on Trump/Putin Meeting: Markets now look to today’s meeting between President Trump and Russian President Vladimir Putin for potential geopolitical developments. 

Market Overview

U.S. equity markets demonstrated incredible resilience today, managing to close near the flatline despite a shockingly hot July Producer Price Index (PPI) inflation report that initially sent shockwaves through the bond and currency markets. The PPI data, which showed wholesale inflation surging by 0.9% month-over-month on both the headline and core readings, was significantly above consensus and raised fresh concerns about persistent inflationary pressures in the economy. This data directly challenges the market’s strong conviction in a September interest rate cut from the Federal Reserve. 

Index	Up/Down	% Change	Last
DJ Industrials	-11.01	-0.0002	44911
S&P 500	1.96	0.0003	6468
Nasdaq	-2.47	-0.0001	21710
Russell 2000	-28.98	-0.0124	2299

The initial reaction to the PPI report was a sharp rise in Treasury yields and the U.S. dollar, which in turn weighed on equities, particularly small caps. The Russell 2000 was the day’s biggest decliner, however, the S&P 500 and Nasdaq showed remarkable stability, propped up once again by strength in a handful of mega-cap technology stocks which continue to act as a “safe haven” for investors. This highlights the extreme concentration in the current market, where the performance of a few key names can mask underlying weakness across the majority of stocks. 

Despite the negative breadth and pressure on most sectors, the major indices held their ground, reflecting a market that seems unwilling to sell off significantly. Investor sentiment, however, is showing some cracks, with the AAII survey turning more bearish. Markets are now positioning ahead of today’s options expiration and a highly anticipated meeting between President Trump and Russian President Vladimir Putin, which could have significant implications for the war in Ukraine and energy markets.

Economic Data

The key economic release yesterday was the July Producer Price Index, which came in significantly hotter than expected, raising inflation concerns. 

• Producer Price Index (PPI) (July): Headline PPI M/M: +0.9% (vs. +0.2% consensus). 
• Headline PPI Y/Y: +3.3% (vs. +2.5% consensus). 
• Core PPI M/M (Ex-Food & Energy): +0.9% (vs. +0.2% consensus). 
• Core PPI Y/Y (Ex-Food & Energy): +3.7% (vs. +3.0% consensus). 
• Weekly Jobless Claims: Fell to 224,000 from 227,000, better than the 228,000 consensus. Continuing claims eased to 1.953 million. 

Commodities, Currencies, and Treasuries 

Gold prices fell as the hotter-than-expected PPI data sent the U.S. dollar and Treasury yields higher. December gold futures settled down $25.10 (-0.74%) at $3,383.20 per ounce. Crude oil prices rallied, with WTI gaining $1.31 (+2.09%) to settle at $63.96/bbl. The gains were driven by expectations ahead of today’s meeting between Presidents Trump and Putin, with Trump warning of “severe consequences” if talks on Ukraine fail, which could impact Russian oil supply. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	1.31	USD/bbl	63.96
Brent	1.21	USD/bbl	66.84
Gold	-25.1	USD/oz	3383.2
EUR/USD	-0.0069	USD	1.1635
USD/JPY	0.46	JPY	147.84
10-Year Note	0.053	%	0.04293

The U.S. dollar index (DXY) gained +0.4% to 98.25, benefiting from the hot PPI report which tempered immediate rate cut expectations. Treasury yields jumped across the curve, with the 10-year yield rising over 5 basis points to 4.293% and the 2-year yield also up sharply, as the bond market priced in a potentially more hawkish Fed. Bitcoin tumbled from its recent record highs on the inflation news, hitting lows around $117,500.

Looking Ahead 

The market will be keenly focused on the outcome of the meeting between President Trump and Russian President Vladimir Putin tomorrow for any geopolitical developments. Tomorrow is also August options expiration, which could lead to increased volume and volatility. With this week’s key U.S. inflation data now released, attention will shift to the Federal Reserve’s Jackson Hole symposium next week, where Chair Powell’s speech will be critical for gauging the central bank’s reaction to the recent hot PPI print and its impact on the September rate cut outlook.