US equity indexes rose despite four-year high in producer prices

US equity indexes closed higher on Thursday despite a sharp increase in producer prices, which grew at the fastest pace in more than four years in September. The Dow Jones Industrial Average rose 1.2% to 52,226.3, the S&P 500 climbed 0.4% to 7,748.1, and the Nasdaq Composite edged up less than 0.1% to 26,714.5. All three indexes had traded lower earlier in the session before reversing course.

The Bureau of Labor Statistics reported that the producer price index rose 1.3% in September. This marked the strongest monthly advance since March 2022 and was more than double the 0.6% increase projected in a Bloomberg-compiled survey. On an annual basis, the PPI climbed 6.3%, the biggest jump since December 2022, exceeding the 5.4% estimate. The August annual figure was revised upward to a 5.6% gain from the previously reported 5.4%. A surge in energy costs drove much of the increase, although energy was the steepest decliner among stock market sectors.

In other market activity, all sectors except energy, technology, and utilities rose. Healthcare, materials, financials, and consumer discretionary led the gains. US retail sales also rose 0.8% in September according to the US Commerce Department, above the 0.3% gain expected in a Bloomberg-compiled survey and following a revised 1.3% increase in August. Jefferies noted in a report that a 6.4% surge in nominal gasoline spending drove most of the sales growth. Control group sales rose 0.1% after a 1.2% increase in August.

Treasury yields declined across most of the curve amid the stock market gains. The two-year yield dropped 4.7 basis points to 4.76%, while the 10-year yield sank 10.1 basis points to 5.09%. The 30-year rate fell 9.4 basis points to close at 5.43%.