Stocks are unchanged after latest U.S. inflation data: Live updates

Stocks were unchanged on Tuesday as traders looked for clarity on future Federal Reserve policy moves after April’s producer price index rose more than expected.

The Dow Jones Industrial Average and the S&P 500 both hovered near flat. The Nasdaq Composite gained 0.3%.

The producer price index reading for April came in above estimates, putting a damper on expectations that the Federal Reserve would begin cutting rates later this year as inflation weakens. The PPI gained 0.5% from April, higher than the 0.3% that economists polled by Dow Jones had anticipated.

While stocks initially moved lower after the inflation reading, the market moves were contained as the March wholesale prices reading was revised down to show a 0.1% decline. That was enough to ease concerns about stubbornly high prices. Traders may also be hesitant to overreact to this report ahead of the more closely followed consumer price index, due to be released Wednesday.

At this point, some investors may not have fully priced in the possibility that inflation will persist at these higher levels, said Megan Horneman, chief investment officer at Verdence Capital Advisors.

“The market is a little bit complacent — they’ve gotten accustomed to dovish rhetoric from Powell,” she said. “In our opinion, the longer this market continues to ignore what’s going on in the inflation category, the bigger decline we can see at some point.”

Traders also reacted to comments from Federal Reserve Chair Jerome Powell, who said on Tuesday that the U.S. central bank will need to practice patience in the face of higher-than-expected inflation.

April’s PPI reading sent bonds higher, with the yield on the benchmark 10-year U.S. Treasury briefly popping above the 4.5% level following the new data. Bond yields later crept lower.

The Dow is coming off its first losing session in nine, snapping its longest winning streak since December. The S&P 500 also inched lower on Monday, while the Nasdaq rose slightly. Stocks were pressured by a Monday report from the New York Federal Reserve that consumers’ expectations for inflation over the short and long term grew in April.