U.S. wholesale prices fell an unexpected 0.2% in June on lower energy prices (see chart), but core wholesale prices (excluding food and energy) rose 0.3%, the Labor Department said Tuesday. The 0.2% drop in the PPI was the first since January, surprising economists who were calling for a 0.2% rise. Conversely, the 0.3% jump in core PPI was its biggest since February as non food and energy prices rose more than expected; economists were looking for 0.2%. Food prices fell 0.8% and energy prices were down 1.1%. Core PPI gains were largely a result of increases in car and truck prices. Over the last 12 months, PPI is up 3.3% while core PPI is up just 1.8%. Separately, U.S. industrial production was up 0.5% in June, slightly short of the 0.6% economists expected, the Federal Reserve said. Capacity utilization was up 0.3% to 81.7%, the highest level of utilization since last October. Economists were looking for a 0.2% increase. After a 1.1% rise in Q1, Q2 production growth was a much stronger 2.9% annually.
Sources: Labor Dept. press release, Fed press release, Dow Jones, MarketWatch I, II
Commentary: Beyond The 'Wall Of Worry' • Remaining Cautiously Optimistic On the Market • The Stock Market Moves Closer To Fair Value
Stocks/ETFs to watch: S&P 500 Index (SPY), Diamonds Trust Series 1 ETF (DIA), iShares Lehman Aggregate Bond (AGG)
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