Stock Market Today: Stocks Close Mixed on Wholesale Inflation Surprise

A hot reading on producer prices led to widespread selling, but a handful of blue chip stocks carved out gains.

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Stocks closed mixed Friday as market participants weighed a hotter-than-expected reading on wholesale-price inflation. Although select pockets of strength offset some of the selling pressure, by the closing bell two of the three major indexes closed in the red. 

Downbeat economic data dominated Friday's session as market participants digested an unwelcome reading on inflation that came in the form of the Producer Price Index (PPI).

PPI, which measures wholesale prices, rose 0.3% in July, the Bureau of Labor Statistics said Friday. That was the highest reading since January and showed an acceleration in inflation vs the previous month when prices were flat. Economists were looking for PPI to rise just 0.2% in July.

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The core producer price index caused even more market trouble. Core PPI, which excludes volatile food, energy and trade services prices, is considered to be a better indicator of future inflation, and it also surprised to the upside. Core PPI rose 0.2% in July – or the largest gain since February – vs a 0.1% increase the previous month. 

The disappointing PPI report, coming as it did just a day after an encouraging reading on consumer price inflation, served as an unwelcome reminder that the Federal Reserve's fight against inflation is far from finished. 

"The higher-than-expected PPI is not great news for the Fed as PPI tends to be a leading indicator for consumer inflation," writes Giampiero Fuentes, an economist at Raymond James. "Today's report continues to show signs that while inflation has been decelerating, the Fed's journey to bring it to its 2% target is not over and it will take more months of positive data to convince the Fed that it is."

On Thursday, the July Consumer Price Index (CPI) report showed that core inflation posted its smallest back-to-back monthly increase in two years.

Blue chip oil stocks bounce

Pricey tech stocks bore the brunt of Friday's selling, sending the Nasdaq Composite down 0.7% to finish at 13,644. The broader S&P 500 fared a bit better but still closed down 0.1% at 4,464.

Happily, rising prices for crude oil made winners out of select blue-chip stocks in the energy sector. Forecasts for a supply deficit helped U.S. benchmark crude futures rise 32 cents to $83.09 a barrel. That, in turn, made winners out of oil & gas giants such as Exxon Mobil (XOM, +1.5%), ConocoPhillips (COP, +1.7%) and Chevron (CVX, +2.0%), a Buy-rated Dow Jones stock

Indeed, CVX helped the Dow Jones Industrial Average escape the day with a gain, closing up 0.3% at 35,285.

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Dan Burrows
Senior Investing Writer,

Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.

A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics, demographics, real estate, cost of living indexes and more.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.