Wholesale Prices Increase in June; Banks Outperform

economic-recovery-bannerU.S. equities are trading slightly higher in early trading on Friday following a higher inflation reading for June along with stronger than expected bank earnings from JP Morgan Chase and Wells Fargo.

The U.S. Labor Department said that its producer price index (PPI) which measures wholesale prices rose .08 percent in June, beating estimates of .02 percent, according to briefing.com and rising above a .05 percent increase in May.

Wholesale prices rose in June due in large part to higher fuel prices and stronger spending levels in the broader U.S. economy.

Core producer price index which excludes food and energy prices, rose 0.2 percent in June, up from estimates of 0.1 percent according to briefing.com. and higher than 0.1 percent increase in May.

Inflation is an important metric that the Federal Reserve pays attention to when deciding if the U.S. economy is resilient enough to warrant having less monetary stimulus injected in the economy through its bond purchases with quantitative easing.

The University of Michigan Consumer Sentiment report for July came in at 83.9, lower than the estimate of 85.5 according to briefing.com and lower than June’s reading of 84.1.

Strong Bank Earnings

JP Morgan Chase, the largest U.S. bank by assets, posted a strong quarterly earnings report that revealed a 31 percent increase in 2nd quarter profits. Net income in the 2nd quarter rose to 6.5 billion in the 2nd quarter of 2013 compared to 4.96 billion in the 2nd quarter of 2012.

Wells Fargo also posted a strong 2nd quarter earnings report, showing its net income for the 2nd quarter in 2013 was 5.52 billion, up 19 percent from the 2nd quarter in 2012.

UPS

Shares of UPS are lower in trading after company executives announced that its 2nd quarter was lower than estimates due to overcapacity in the global air freight market and a slowdown in U.S. industry.

 

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