World stock index set for record high, dollar dips after PPI, Powell

NEW YORK – MSCI’s gauge of stocks across the globe was set for a record high close on Tuesday, while the US dollar edged lower as investors digested US producer prices data and comments from Federal Reserve Chair Jerome Powell.

Major US stock indexes also climbed, with the Nasdaq posting a closing all-time high.

Data showed US producer prices rose more than expected in April amid strong gains in the costs of services and goods, indicating that inflation remained elevated early in the second quarter.

Powell, speaking at a banking event in Amsterdam, said the latest report on US producer prices was more “mixed” than “hot” given that prior data was revised lower even as the figures for April came in higher than expected.

The key data of the week, though, will be Wednesday’s US consumer prices report.

Investors have been watching inflation data closely as they weigh how soon the Fed might lower interest rates.

Higher-than-anticipated consumer prices in the first quarter of the year raised concerns that the Fed will be unable to cut rates this year unless there is a significant uptick in the unemployment rate.

The Dow Jones Industrial Average rose 126.60 points, or 0.32%, to 39,558.11, and the S&P 500 gained 25.26 points, or 0.48%, to 5,246.68. The Nasdaq Composite gained 122.94 points, or 0.75%, to 16,511.18, surpassing its prior peak set on April 1.

MSCI’s gauge of stocks across the globe rose 3.07 points, or 0.39%, to 785.90, and earlier hit an intraday record. The STOXX 600 index rose 0.15%.

The dollar edged lower following the PPI data.

“Sticky inflation looked downright stuck this morning after a much hotter-than-expected inflation reading. But with last month’s numbers revised lower, this report may not have been as much of an upside shock as it first appeared to be,” said Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.17% to 105.01, with the euro up 0.26% at USD 1.0816.

Against the Japanese yen, the dollar strengthened 0.16% to 156.45.

Benchmark 10-year Treasury yields briefly hit an 11-day high after the PPI data and then they retraced.

The yield on benchmark US 10-year notes fell 3.2 basis points to 4.449%, from 4.481% late on Monday.

US President Joe Biden on Tuesday unveiled a bundle of steep tariff increases on an array of Chinese imports including electric vehicles, computer chips and medical products.

The announcement came after market close in China, but US-listed shares of Chinese EV makers including Li Auto were down 2.2%.

Brent crude futures fell 98 cents, or 1.18%, to settle at USD 82.38 a barrel. US West Texas Intermediate crude futures (WTI) fell USD 1.10, or 1.39%, to settle at USD 78.02 a barrel.

Spot gold added 0.89% to USD 2,356.95 an ounce.

(Additional reporting by Bansari Mayur Kamdar and Shristi Achar A in Bengaluru, and Alun John and Tom Westbrook; Editing by Marguerita Choy and Mark Potter)