As the meme continues to grow, the Producer Price Index rises.
It’s inflation data week as markets await the release of April Consumer Price Index (CPI) numbers on Wednesday. On Tuesday, the Bureau of Labor Statistics (BLS) released the Producer Price Index (PPI). It is a measure of changes in the prices at which manufacturers or producers of goods and services sell their products.
The April PPI rose 0.5% after falling 0.1% in March. PPI for final demand rose 0.5%, slightly lower than the 0.6% increase in February. Services final demand rose 0.6%, the highest since July 2023, while prices of final demand goods rose 0.4%.
Additionally, the 12-month change in final demand increased to 2.2% from 1.8% in March. This is the largest increase since April 2023, when the figure rose 2.3%.
Additionally, final demand excluding food, energy, and trade increased 0.4% in April, following a 0.2% increase in March. The 12-month change in final demand excluding food, energy and trade was 3.1%, the largest increase since a 3.4% rise in April 2023. This is considered an important measure as it excludes more volatile food, energy and trade prices.
The PPI rise was higher than economists had expected to rise 0.3% in April. PPI is often considered a predictor of CPI, but this is not always the case as there are variables that can result in different movements for both gauges.
Markets haven’t moved, but meme stock rally continues
The markets did not react negatively to the PPI surge on Tuesday morning, as all major indices were trending upward. In part, concerns about PPI may have been offset by a resurgence in meme stocks that continue to rise.
On Monday, game stop (NYSE:GME) gained more than 70% in 2020 and 2021, driven by apparent gains from the investor known online as Roaring Kitty, aka Keith Gill, who led the meme stock’s surge. The initial focus was on pumping up GameStop stock, but the exuberance soon spread to other meme stocks, including: AMC Entertainment (NYSE:AMC).
GameStop and AMC are trading as of Tuesday morning, with GameStop surging 80% to about $55 per share and AMC surging 95% to more than $10 per share. Since Friday’s close, GameStop is up about 215% and AMC is up about 250%. Investors should be extremely cautious about stocks with this level of volatility without corporate earnings to back them up.
Tuesday’s other big news was fresh comments from Federal Reserve Chairman Jerome Powell, speaking at the Foreign Bankers’ Association in Amsterdam. More on this as it develops.
