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US Stock Market Overview – Stocks Rally Led by Nasdaq; Building Permits Soar

PPI rises to a 18-month
David Becker

US stocks moved higher on Wednesday led by the Nasdaq, which rallied nearly 0.9%. Most sectors in the S&P 500 index were higher led by energy and technology shares. Utilities and Real-estate bucked the trend. The Labor Department reported that U.S. producer prices increased by the most in more than a year in January, boosted by rises in the costs of services. US Housing Starts declined less than expected. The Fed meeting minutes showed that central bankers are content with rates where they are. Gold prices rallied another 0.65% helping to buoy gold mining shares.

Producer Prices Rise More than Expected

The Labor Department reported that US producer prices increased to an 18-month high in January, boosted by rises in the costs of services such as healthcare and hotel accommodation. The producer price index increased by 0.5% in January, the largest gain since October 2018, after climbing 0.2% in December. On a year over year basis, PPI advanced 2.1%, the biggest increase since May, after rising 1.3% in December. Expectations were for PPI to gain 0.1% in January and rising 1.6% on a year-on-year basis. Excluding the volatile food, energy and trade services components, producer prices increased 0.4%, the most since April, after rising 0.2% in December. The core PPI increased 1.5% in the 12 months through January, matching December’s rise.

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Housing Start Fall Less than Expected

US Housing Starts fell less than expected in January while permits surged to a near 13-year high. Housing starts dropped 3.6% to an annual rate of 1.567 million units last month, according to the Commerce Department. That followed three straight monthly increases. Data for December was revised up to show homebuilding rising to a pace of 1.626 million units, the highest level since December 2006, instead of surging to a rate of 1.608 million units as previously reported. Expectations had been for housing starts to fall  to a pace of 1.425 million units in January. Housing starts jumped 21.4% on a year-on-year basis in January. Building permits soared 9.2% to a rate of 1.551 million units in January, the highest level since March 2007, lifted by gains in both single- and multi-family housing segments.

The Fed Meeting Minutes Show Rates Will Remain Unchanged

Federal Reserve meeting minutes showed that officials expressed confidence at their most recent meeting about the state of the U.S. economy. They believe that interest rates likely would remain unchanged for a while. The central bank’s policymaking group voted to leave its benchmark overnight funds rate in a range between 1.5% and 1.75%. In coming to that decision, Federal Open Market Committee members noted that the outlook for the economy had gotten stronger just since the previous forecast in December.

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