July PPI Flat, Core Below Forecast — S&P 500 Clears 7,800 for First Time as September Fed Hike Odds Sink Below 35%

BLS reported the Producer Price Index for final demand was unchanged in July, below the 0.2% Dow Jones consensus forecast; core PPI (ex-food and energy) rose 0.2%, also below the 0.3% estimate. The annual headline rate held at 4.7%, core at 4.2%. Goods prices fell 0.7%, driven by a 3.1% drop in energy costs (gasoline -5.7%), while services prices rose 0.2% and food fell 0.9%. Arriving a day after the softer-than-expected July CPI, the cooler wholesale-inflation reading further eased pressure on the Fed: the S&P 500 gained 0.65% to close at a fresh record 7,799 — clearing 7,800 intraday for the first time — the Nasdaq Composite rose 0.81% to 26,803, and the Dow edged up 0.13% to 53,840. The 10-year Treasury yield eased about 4bp to 4.65%, and gold fell 1.3% to $4,349.85/oz. Market-implied odds of a 25bp September Fed rate hike fell to under 35%, down from roughly 55% a week earlier.