Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed lower on Wednesday as investors digested new inflation and retail sales data.
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In November, the Producer Price Index (PPI) climbed 0.2% month-over-month, rising from 0.1% in October and in line with the analyst estimate of 0.2%. However, PPI rose 3% year-over-year, topping the estimate of 2.7%. The PPI tracks changes in prices received by producers for goods and services and is often viewed as a leading indicator of consumer inflation. Core PPI, which excludes volatile food and energy prices, was unchanged from the prior month and advanced 3% year-over-year. Analysts had forecast growth of 0.2% and 2.7%, respectively.
A strong consumer spending update wasn’t enough to lift the market. In November, retail sales increased 0.6% month-over-month, above the estimate of 0.5% and marking the highest rate of growth since July. At the same time, the U.S. Department of Commerce revised October’s retail sales growth to a decline of 0.1% from 0%.
November is generally a strong month for sales, as it marks the beginning of the holiday shopping season and includes Black Friday. From November 1 to December 31, online consumer spending surged 6.8% from the prior year to a record high of $257.8 billion, according to Adobe (ADBE).
Meanwhile, the Supreme Court held its second opinion day of the year, although investors expecting a decision on the landmark Trump tariff case were left empty-handed. The next earliest date that SCOTUS could announce a ruling for the case is Tuesday, although uncertainty remains as the court doesn’t preannounce the rulings it will address.
Still, President Trump’s tariffs haven’t resulted in higher inflation, according to Federal Reserve Bank of Philadelphia President Anna Paulson. “We’ve seen progress on underlying inflation that is likely to continue and there is no evidence to date that tariff-induced price increases are leading to broader inflation,” she said in prepared remarks for an economic event in Philadelphia on Wednesday. Paulson added that her base case for 2026 involves inflation cooling down to the Fed’s target of 2%, a stabilizing labor market, and economic growth of 2%.
The S&P 500 (SPX) closed with a 0.53% loss, while the Nasdaq 100 (NDX) fell by 1.07%.
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