Key Takeaways
- US wholesale inflation (Producer Price Index) surged, with a 0.9% month-over-month increase and 3.3% year-over-year rise, dampening the stock rally and trimming September Fed rate cut odds to ~85%.
- Federal Reserve Chair Jerome Powell is slated to deliver a key speech on August 22, closely watched for signals on future monetary policy amid ongoing rate cut and succession speculation.
- Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B) made notable portfolio adjustments in the second quarter, initiating a new stake in UnitedHealth (UNH) while completely exiting its holding in T-Mobile (TMUS).
The recent stock market rally has stalled following the release of hotter-than-expected US wholesale inflation data. The Producer Price Index (PPI) saw a significant 0.9% month-over-month increase and a 3.3% year-over-year jump, which subsequently boosted Treasury yields and the dollar. This inflationary pressure has led to a trimming of expectations for a September Federal Reserve rate cut, with odds now standing at approximately 85%, despite continued market anticipation for easing monetary policy.
Against this backdrop of inflation concerns, all eyes are now turning to Federal Reserve Chair Jerome Powell, who is scheduled to speak on August 22. His remarks will be scrutinized for any indications regarding the Fed's future path on interest rates and broader monetary policy, especially amid ongoing speculation about potential rate cuts and even his succession. The market remains sensitive to central bank commentary as it navigates economic data.
In corporate news, Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B) disclosed its second-quarter portfolio changes, revealing strategic shifts in its holdings. The conglomerate acquired shares in healthcare giant UnitedHealth (UNH), signaling a new investment focus. Conversely, Berkshire Hathaway exited its entire position in T-Mobile (TMUS) during the same period, indicating a divestment from the telecommunications sector. These moves reflect Buffett's latest investment thesis and could influence investor sentiment in the respective sectors.
Separately, the Federal Reserve continues to provide transparency on its operations, with its weekly Balance Sheet report being made available to the public. This report offers insights into the Fed's assets and liabilities, providing further data for market analysis.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.