Dow Jones Dragged Down by Red Hot PPI Inflation Data

The Dow Jones (DJIA) is set to open Wednesday lower following a disappointing inflation update from the Bureau of Labor Statistics (BLS).

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The U.S. Producer Price Index (PPI) rose 0.7% month-over-month and 3.4% year-over-year in February, registering the highest rate in 12 months. Both figures were well above the consensus estimates of 0.3% and 3.0%, respectively. The PPI tracks the prices that producers charge for their goods and services and is often used as an early indicator of inflation.

PPI Inflation Rises ahead of Fed Rate Decision

Core PPI, which excludes volatile food and energy prices, notched a monthly gain of 0.5% and grew 3.9% annually. Again, both figures tallied above their estimates of 0.3% and 3.7%, respectively.

The data will likely reinforce the Fed’s decision to hold interest rates steady in order to bring down inflation. The central bank will release its rate decision at 2 p.m. Eastern Time today, with the CME FedWatch tool pricing in a 99% chance of unchanged rates. By year-end, the most likely outcome at 40.5% is for one rate cut, although the odds of rates remaining unchanged trail slightly behind at 39.5%.