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David Becker

US stocks were lower on Tuesday as the rotation into value stocks saw the Nasdaq sell-off. The S&P 500 index hit an intra-day all-time high, before turning lower later in the session. US yields moved higher with the 10-year hitting 64-basis points up 6-basis points reaching the highest levels seen since early July. The rise in yields weighed on precious metals knocking silver down 12% and gold prices down 5%. As the large cap S&P 500 index testes all-time highs, nearly 62% of the stocks in the S&P 500 index are at all-time highs. This compares to January when nearly 87% of the stocks in the index were at all-time highs. This means that the rally in the S&P 500 has come mainly with help from growth stocks and value has trailed.

Sectors in the S&P 500 index were mixed, with Financials leading the way higher, and Utilities bucking the trend. Oil prices attempted to move higher early in the session but were rejected and closed lower. The VIX volatility index hit 20% for the first time since February but rebounded to close above 22. While these levels are the lowest in 5-months they are still well above the average level of 15 seen in 2019. US PPI rose more than expected driven higher by gains in gasoline.

US PPI Rises More than Expected

The Labor Department reported that the producer price index increased 0.6%, driven by a surge in gasoline. That was the biggest gain since October 2018 and followed a 0.2% decline in June. On a year over year basis, the PPI dropped 0.4% after falling 0.8% in the 12 months through June. Expectations were for PPI to rise by 0.3% in July. Excluding the volatile food, producer prices increased 0.3% last month after a similar rise in June. On a year over year basis, core PPI edged up 0.1%.

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