NEW YORK, April 9 (Reuters) – The S&P 500 and the Dow posted modest gains on Friday, but the Nasdaq was lower, with interest-rate sensitive stocks losing ground as Treasury yields edged higher. But all three major U.S. stock indexes were on track to post weekly gains as upbeat economic data boosted investor risk appetite ahead of the first-quarter earnings season. “The reopening trade is still very much alive,” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. “And you’re seeing that in the relative underperformance of the high-flying tech that did so well throughout the shutdowns.”
A Labor Department report showed producer prices rose last month at twice the speed of February’s growth, reviving some inflation worries.
This, despite U.S. Federal Reserve Chairman Jerome Powell’s assurances on Thursday that the central bank is far more concerned about the recent uptick in COVID-19 infections than inflationary pressures.”Things are now getting back to normal from a period of suppressed pricing,” Pursche added. “Prices are getting back to their equilibrium. One month of price spikes does not make a trend.”U.S. Treasury yields rose, hitting session highs in the wake of the PPI report, which provided further evidence that the world’s largest economy was on a stable road to recovery from the pandemic. Benchmark 10-year notes last fell 7/32 in price to yield 1.655%, from 1.632% late on Thursday. The 30-year bond last fell 3/32 in price to yield 2.327%, from 2.322% late on Thursday. With supply chain bottlenecks and the economy’s broad re-opening fueling gains, the Fed is likely to continue to sit on its hands with policy as it awaits to see whether the recent pickup will have staying power beyond this year.” “The strongest year-over-year increase in producer prices in nearly 10 years reflects more than just easy base comparisons from last spring, however.” “We expect to see the year-over-year rates of inflation rise further over the course of this year, not just due to the easy base effects of last spring, but also due to the recent strengthening in demand at a time businesses are having difficulty getting their hands on materials and labor. However, we expect this too will have a transitory element to it. As bottlenecks ease and the initial flurry of services activity ebbs later this year, we expect to see a moderation in the monthly pace of price increases, which will generate a slowdown in the year-ago rate of inflation by mid-2022.” Nick Note: this is not inflation but reflation. they got to fill up the supply pipeline…. Nothing more!