S&P 500 Hits New High, Encouraged by Lower Wholesale Prices
On June 18, 2025, the trading scene was bustling at the New York Stock Exchange. The S&P 500 Index achieved a new record after an unexpected decline in wholesale price readings, which many investors are viewing positively as they anticipate Federal Reserve rate cuts next week, aimed at boosting the economy.
Oracle’s stock played a significant role in the day’s profits, surging over 30% due to promising forecasts related to artificial intelligence. The broader market saw the S&P 500 rise by 0.2%, while the Nasdaq Composite lingered near the flatline, but also reached an all-time high during trading. Contrarily, the Dow Jones Industrial Average fell by 229 points (0.5%), primarily prompted by a drop in Apple’s stock, reportedly due to a lackluster response to the latest iPhone announcement.
August’s producer price index indicated a slight drop of 0.1% in wholesale prices, diverging from Dow Jones economists’ expectations of a 0.3% rise. Core producer prices, which leave out food and energy costs, also saw a 0.1% decrease, again contrasting with the expected 0.3% increase.
This report hints at a cooling trend in inflation ahead of the consumer price index release set for Thursday. Dow Jones forecasts a potential monthly rise of 0.3% in the CPI, which, if accurate, would push the annual rate to 2.9%. However, the core reading is likely to stay steady at 3.1%.
Sam Stovall from CFRA Research suggests that if the figures align with these estimates, there’s a chance for the Federal Reserve to implement another rate cut in its September meeting. There seems to be a consensus among traders that a reduction of at least a quarter-point might occur, and future trading indicates that the central bank could consider deeper cuts by as much as 50 basis points, given the latest PPI data.
“The producer price index shock, coupled with soft employment data, definitely hints at reasons for the Fed to lower rates by 50 basis points,” Stovall indicated. His commentary suggests the Fed is keen to avoid falling behind as they monitor economic trends closely.
Looking ahead, he observed, “It’s quite plausible that we could see increased trading activity in the market before the year wraps up.” Meanwhile, Oracle’s impressive cloud revenue forecast, despite its existing revenue shortcomings, stirred investor interest. The company projects aiming for $144 billion in cloud infrastructure revenue by 2030, a massive leap from $10.3 billion in fiscal 2025.
Lastly, it appears that investors are turning their attention back to the AI sector, as both NVIDIA and AMD stocks have also seen a rise, suggesting a renewed interest in these technology giants.
