More trade worries. Global stocks are modestly lower this morning as investors process reports that the United States is delaying a decision to grant some U.S. companies permission to conduct business with Huawei Technologies, a Chinese tech giant that was blacklisted in May amid the U.S.-China trade dispute. Producer prices in China also declined year over year in July for the first time since 2016, fueling worries about international deflation.
Strong reversal for equities. Even though stocks are lower in early trading today, stocks have staged a strong comeback this week, clawing back from the S&P 500 Index’s 3% drop from Monday to close slightly higher on the week through Thursday. While we don’t think volatility is over just yet, there are several technical reasons to believe a retest of the December lows is an unlikely scenario. We’ll explore support and sentiment later today on the LPL Research blog.
Producer price growth slows. The pace of wholesale price growth steadily declined in July, hinting that weakening global demand continues to weigh on domestic inflationary pressures. The core Producer Price Index (PPI), which excludes food and energy prices, unexpectedly dropped 0.1% month over month, its first decline since February 2017. Core PPI rose 2.2% year over year, the slowest pace of growth since June 2018. We’ll get more details on the state of inflation next week, as July Consumer Price Index (CPI) data is released on August 13 and import/export price data is released August 14.
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