PPI Flat for Februrary as Market Remains Nervous Over Tariffs, Dis-inflation, and Recession; Gold Gains, Silver Fails to Advance

The S&P 500 and NASDAQ each got a reprieve from selling after finishing lower the first two days of the week, the Dow Jones Industrial Average did not, marking its third straight session in the red.

In an up-and-down Wednesday session, the S&P and NASDAQ chopped their way from early losses to finish on the upside, thanks to a moderate CPI reading for February.

This morning's February PPI didn't offer any similar relief, coming in flat as compared to January's hike of 0.6% and December 0.5% rise.

The BLS reported:

The Producer Price Index for final demand was unchanged in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.6 percent in January and 0.5 percent in December 2024. On an unadjusted basis, the index for final demand advanced 3.2 percent for the 12 months ended in February.

This reading provides yet more evidence that inflation is no longer the main problem facing the economy, because deflation or dis-inflation are accompanying the Trump administration's policies of downsizing government (DOGE), deporting illegals, and issuing tariffs across the globe.

The smartest guys on Wall Street are more than likely clued in to this sudden change, though they, and the financial "journalists" covering the markets and economy are not about to talk openly about it. That might scare the muppets even more than rising prices. Instead, they're keeping the information on the QT, selling off losers and taking profits on winners, of which there have been many over the past 16-18 months.

When the PPI figure was announced, there was no joy to be seen nor heard in lower Manhattan. On one hand, flat producer prices aren't exactly what the inflation-lovers at the Fed and in Wall Street brokerage houses want to hear. In case it even matters at all any more, the Federal Reserve is unlikely to even consider lowering the federal funds target rate at its meeting next week or in any subsequent meeting for the time being. The only condition under which the Fed might drop the key rate would be in the case of an imminent recession, to provide stimulus to the business community and ease up on consumers, but that condition has yet to materialize.

It likely will in months ahead, perhaps even as early as late April, when first quarter GDP is estimated. Current projections are for the U.S. economy to have shrunk by 2-3% for the quarter, though it's still too early to tell. Market participants may get their wish sooner than expected, though not for the reasons they prefer, and maybe not at all.

All that was elicited from stock futures when the PPI was announced was a huge yawn, as though PPI was a rag doll compared to Wednesday's beauty queen CPI.

With the market minutes from opening, Dow futures are down 80 points, NASDAQ futures off 74, and S&P futures dragged down 13.

WTI crude futures, which have been priced higher the past two days after Monday's collapse to $65.52, is down once again, off 54 cents, at $67.51, a price which is not encouraging to producers.

Gold topped $2,950 on the COMEX this morning, though silver refuses to be bid above $33.50, already backing off slightly, to $33.35.

With nothing big happening on Friday, Thursday's trade may offer some insight as to how low markets may want to go.

At the Close, Wednesday, March 12, 2025:
Dow: 41,350.93, -82.55 (-0.20%)
NASDAQ: 17,648.45, +212.35 (+1.22%)
S&P 500: 5,599.30, +27.23 (+0.49%)
NYSE Composite: 19,051.64, -0.49 (-0.00%)