Stock Futures Drop on Wholesale Price Spike

Published as of: August 14, 2025, 9:22 a.m. ET

(Thursday market open) The long rally and light summer volatility got tested today as July wholesale prices rose far more than expected—the most since 2022. The headline and core Producer Price Index (PPI) readings both jumped 0.9% when analysts had expected 0.2%. Stocks were flat overnight but slipped on the news, while short-term Treasury yields rose as investors reassessed odds of rate cuts next month.

"Many PPI components feed into the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, suggesting that the July PCE may come in on the high side as well," said Collin Martin, director, fixed income strategy at the Schwab Center for Financial Research. "This should muddy the outlook for Federal Reserve policy, as its two mandates appear to be in a bit of tension." The Fed is charged with achieving maximum employment and stable prices and has kept rates unchanged since last December at somewhat restrictive levels. Market participants widely expect a rate cut next month. PCE is due later this month.

Wall Street's rate-driven rally to fresh record highs Wednesday revived ideas that there's life beyond the mega caps. By late in the session, 387 members of the S&P 500 were up for the day, with seven of 11 sectors in the green. About 62% of the S&P 500 is above the 50-day moving average, but that's not what veteran traders would call broad participation. In fact, as the S&P 500 sets new highs, only 24% of S&P 500 stocks are outperforming the index over the last 60 days.

1. PPI deeper dive: Annual PPI rose 3.3% from 2.4% in June and represented a five-month high, while core PPI jumped to 3.7%. Core excludes energy and food. Expectations had been 2.5% and 2.9%, respectively. Today's swollen PPI numbers came out of nowhere in a sense, as both had been flat in June and Tuesday's Consumer Price Index (CPI) seemed relatively benign. Now investors may have to rethink whether wholesale prices might eventually make their way into CPI, as is sometimes the case. This was the largest increase in PPI since June 2022, and the cost of services led the way with 1.1% gains, while goods prices went up 0.7%. "PPI services this year has been in a range of a 0.3% drop to a 0.7% increase," Martin said. "The services increase was notable." A 3.8% jump in machinery and equipment wholesaling led to 30% of the services rise, while trade services margins increased 2%—suggesting producers passed along tariff-related price increases to protect their margins. Food prices also rose sharply, though goods prices excluding food and energy rose just 0.4%. In other data today, weekly initial jobless claims were 224,000 and continuing claims were 1.953 million, in line with expectations.
    
2. Another day, another tech earnings report: Applied Materials (AMAT), a semiconductor equipment maker, reports this afternoon after missing analysts' expectations on revenue in its fiscal second quarter. Semiconductor revenue growth is key to watch with this one, and Applied Materials impressed with its guidance last time out. Nvidia (NVDA), the biggest chip firm, reports August 27, but overall semiconductor earnings so far this quarter have been mixed, with Texas Instruments (TXN) and ASML (ASML) both issuing disappointing guidance. However, these firms don't compete directly with companies like Nvidia and Advanced Micro Devices (AMD) in the data center chip market associated with heavy AI spending. AMAT makes advanced node technologies critical to AI chip production, meaning it's a decent barometer for that market. The overall blended S&P 500 earnings per share growth rate is now 13.2% for the second quarter, up from an expected 5.8% on July 1—another prime reason for the record-setting market rally. Blended earnings measure companies that already reported and estimates for those that haven't. Retail earnings pick up next week as big-box firms including Walmart (WMT) and Target (TGT) report.
    
3. Geopolitics back on menu as Alaska meeting nears: President Trump's meeting with Russian leader Putin tomorrow could keep commodities markets churning. Both crude oil and gold fell early this week on hopes for progress on the Ukraine conflict and the possible resumption of Russian oil flows to world markets. And prices of copper, a key industrial metal, have stayed relatively low the last two weeks after falling dramatically earlier this month when Trump's copper tariffs were announced with some exceptions to the policy that lessened the impact. Copper remains up from a year ago, however and historically expensive near $4.50 a pound. It frequently traded below $3 before the pandemic. Copper is worth watching for possible inflationary impacts on many goods. Robust demand is expected to accelerate a supply shortage, Bloomberg recently reported, with the shortfall likely to reach six million tons by 2035. Heavy copper demand partly reflects the construction of AI data centers, but supplies are constrained due to years of underinvestment. Copper is also needed for power cables, electric vehicles, and plumbing, among many other things.

• Cisco (CSCO) slipped 1% as earnings narrowly topped analysts' consensus on earnings and revenue. Guidance for the fiscal first quarter were near the market's estimates. For the year, quarterly revenue rose 8% and gross margin was near the high end of Cisco's guidance range. The closely watched networking category saw 12% revenue growth to slightly above analysts' consensus but appeared cautious to analysts.
   
• Moderna (MRNA) rose 4.8% yesterday after the administration appeared to take a softer line on mRNA-based vaccines like those made by Moderna, Barron's reported.
   
• Tapestry (TPR) tumbled 11.2% ahead of the open as the fashion company said tariffs will have a significant impact on its outlook. Quarterly earnings and revenue surpassed Wall Street's estimates.
   
• Oracle (ORCL) fell 3.8% Wednesday as Bloomberg reported the company cut jobs in its cloud infrastructure business.
   
• Home builder stocks stayed strong yesterday with around 5% gains for both Lennar (LEN) and D.R. Horton (DHI). This, along with strong performances recently from home renovation and appliance firms like Home Depot (HD) and Lowe's (LOW), and Whirlpool (WHR) on Wednesday could reflect hopes for lower interest rates. A 10% bump in mortgage applications last week might also have played into the move.
   
• Deere (DE) shares dropped nearly 6% in early trading after cutting its full-year net income forecast to a range in which the mid-point is below analysts' expectations. Third quarter revenue and profit fell for the farm equipment giant but earnings exceeded Wall Street's consensus and revenue met consensus.
   
• Dillard's (DDS) climbed 4% in pre-market trading after easily beating consensus on earnings per share and meeting analysts' consensus for revenue. Sales at stores open a year or more rose 1% for the department store chain.
   
• The Russell 2000^® (RUT) small-cap index gained nearly 2% yesterday to lead all major indexes as hopes for lower interest rates continue to bolster small-cap stocks. Smaller companies often depend more on borrowing and have been hit hard by tariff policy. Still, the index remains well below last fall's highs.
   
• Bullish (BLSH) climbed another 13% in the early going after soaring almost 84% on the crypto exchange's debut as a public company Wednesday. A rally in cryptocurrency shares may be helping, Barron's reported.
   
• Bitcoin (/BTC) fell 1.6% early Thursday but that came after it hit an all-time high above $125,000 overnight. Hopes for rate cuts appear to be supporting cryptocurrencies.
   
• The CME FedWatch Tool prices in 94% odds of a rate cut next month, down from 100% yesterday. The drop came after PPI data hit.

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With Nvidia (NVDA) seemingly making new highs all the time, investors might be surprised to learn that the PHLX Semiconductor Index (SOX—candlesticks) still hasn't managed to top the all-time high close of 5,904 set more than a year ago on July 10, 2024. It is closing in on that, finishing Wednesday at 5,892.61. It also has outpaced the Nasdaq-100^® index (NDX—blue line) and the S&P 500 index (SPX—purple line) over the two years shown on this chart.

August 15: July retail sales, July industrial production, and preliminary August University of Michigan Consumer Sentiment.
August 18: Expected earnings from Palo Alto Networks (PANW).
August 19: July housing starts and building permits and expected earnings from Home Depot (HD) and Medtronic (MDT).
August 20: FOMC minutes and expected earnings from TJX Companies (TJX), Lowe's (LOW), Analog Devices (ADI), Target (TGT), Estee Lauder (EL), and Baidu (BIDU).
August 21: July existing home sales, July leading indicators, and expected earnings from Walmart (WMT), Intuit (INTU), Workday (WDAY), and Ross Stores (ROST).