Investing.com -- The S&P 500 closed higher Tuesday, but traders had to contend with choppy trading ahead of further inflation after a cooler-than-expected producer price index report helped stifle the recent spike in Treasury yields.
At 4:00 p.m. ET (21:00 GMT), the Dow Jones Industrial Average rose 0.5%, the S&P 500 index rose 0.1%, and the NASDAQ Composite fell 0.2%.
US PPI cooler than expected
US producer prices rose at a slower-than-anticipated rate in December, with the producer prices index increasing by 0.2% on a month-on-month basis in December, according to data released earlier Tuesday. Economists had anticipated the reading would match November's pace of 0.4%.
Compared to a year earlier, the PPI ticked up by 3.3%, accelerating from 3.0% in the prior month but cooler than estimates of 3.5%.
"While this morning’s report does little to arrest the likelihood – and need – for a policy pivot near term, it does seemingly afford the Committee more flexibility for policy as the data continue to evolve in the new year and under a new regime in Washington," Stifel said in a Tuesday report.
The cooler inflation data helped pause the climb in Treasury yields, with the 10-year Treasury yield falling 2 basis points to 4.785% as investors looked ahead to fresh inflation data.
This data comes ahead of Wednesday's consumer price index, and will offer more cues on interest rates after strong payrolls data from last week cemented bets on a slower pace of Fed rate cuts this year.
Applied Digital soars after Macquarie takes stake
Applied Digital Corp (NASDAQ:APLD) rose 10% after reporting that Macquarie had agreed to invest $5 billion in the company's data centers and take a 15% stake in the company's high-performance computing segment.
Boeing Co (NYSE:BA), meanwhile, fell 2% after aircraft maker's delivered just 348 airplanes in 2024, down about a third from a year earlier amid struggles to ramp up production following the mid-air Alaska Air (NYSE:ALK) door panel blowout saga and the machinist strike.
Trump team considering gradual tariff hike - Bloomberg
Trump’s economic team is considering a program of gradual increases in import tariffs over the coming months, Bloomberg reported on Monday, with the proposal aimed at enhancing leverage with trading partners and preventing a sudden increase in inflation.
The plan - which has not yet been presented to Trump - involves a schedule of 2% to 5% increases in tariffs per month, and will be implemented under the executive authority of the International Emergency Economic Powers Act.
Trump will take office on Jan. 20, and has vowed to impose steep trade tariffs on several major economies, especially China, from “day one” of his term. He vowed to impose a minimum 10% to 20% tariff on all imported goods, and a 60% tariff on China.
Recent reports said he could also declare a national economic emergency to carry out this plan.
Fears of increased import duties had sparked increased risk aversion on Wall Street, especially as Federal Reserve officials also warned the duties could underpin inflation and keep interest rates high in the long term.
Banks to lead earnings season; Signet Jewelers slumps on guidance cut
The earnings season is also set to begin in earnest on Wednesday, with prints due from several major Wall Street banks- including JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C).
Elsewhere, Lululemon Athletica (NASDAQ:LULU) fell 2.5% despite athleisure company lifting its holiday outlook for earnings and revenue, while KB Home (NYSE:KBH) stock was up 4% after the home building firm's fourth-quarter results surpassed analyst estimates on the top and bottom line.
Signet Jewelers Ltd (NYSE:SIG) slumped 22% after cutting its guidance for the fourth-quarter as a weaker consumer pressured holiday sales.
(Peter Nurse, Ambar Warrick contributed to this article.)