PPI Remained Unchanged
PPI Data Lower than Expected: A Pull-Forward in Effect?
This morning, the latest Producer Price Index (PPI) was released for the month of June. Following yesterday's Consumer Price Index (CPI) — the retail print on monthly inflation — today's PPI reflects the wholesale side. Headline PPI for June, month over month, reached 0.0% — lower than the +0.2% expected and 30 basis points (bps) below the upwardly revised +0.3% from the prior month.
Subtracting volatile food and energy costs on the producers' side, core PPI was also 0.0%, as was the latest ex-food, energy and trade read: 0.0%. These are down from the upward revisions on both metrics of +0.4% and +0.1%, respectively. These are also the coolest inflation prints on PPI since April of this year — the month President Trump brought tariffs to bear.
PPI year over year on headline came in at +2.3%, 30 bps below expectations and the lowest since +2.1% reported in September of last year. Core PPI year over year reached +2.6%, a notch below estimates and -40 bps from the May print of +3.0%. Year over year, ex-food, energy and trade, we see +2.5% — 20 bps under estimates and the slimmest wholesale inflation print since November of 2023.
Coming as these numbers are within the static of a U.S. tariff policy with constantly moving goalposts, we can attribute some of this surprise to a likely pull-forward from the months prior. Lower wholesale inflation — especially when we saw warmer-than-expected retail inflation in the CPI numbers yesterday — quite likely means supplies had been sufficient in previous months to not be beholden to higher sticker prices in the month of June.
To the extent this data funnels into Fed-preferred metrics on overall inflation, we still see these PPI numbers above optimal inflation levels of +2.0%. In fact, since the Great Reopening as the Covid pandemic dimmed four years ago, we've never gotten back down to +2.0% inflation. Then again, as we mentioned in this space yesterday, +2.0% inflation is a notion very likely on borrowed time; once Fed Chair Jerome Powell is replaced, we expect the overall narrative to change.
Q2 Earnings Roundup: Financials and More
After Tuesday kicked off Q2 earnings season for some of the biggest banks on Wall Street, today we see a continuation: Bank of America (BAC) posted a 3-cent beat to 89 cents per share (6 cents higher than the year-ago quarter) for a +3.5% earnings surprise. Revenues, however, missed estimates slightly, -0.5%. Better-than-expected loan revenue has helped prop the stock in early trading.
Perhaps the best Q2 earnings report so far belongs to Goldman Sachs (GS), which posted a +15.7% earnings surprise this morning: $10.91 per share versus $9.43 expected (which itself was +9.4% higher than the year-ago quarter) on $14.58 billion in quarterly revenues, which easily surpassed the $13.5 billion estimate by +8%. This is a good sign for investment banking overall. But as shares have already climbed +22.7% year to date, this morning's gains are so far slim.
Morgan Stanley (MS) also represented strongly for investment banking this morning, with earnings of $2.13 per share on $16.79 billion in revenues for the quarter outpacing the Zacks consensus by +10.36% and +5.5%, respectively. Yet shares are selling a bit ahead of the opening bell, -1.8%, after having doubled the finance sector year to date.
Johnson & Johnson (JNJ) shares are up +2% on its impressive Q2 earnings beat this morning, with earnings of $2.77 per share outperforming projections for $2.66 (though still down from $2.82 per share reported in the year-ago quarter). Revenues of $23.7 billion are up nicely from the $22.80 billion expected. CEO Joaquin Doato says he sees a stronger 2H2025 ahead for the pharma/household goods giant.
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This article originally published on Zacks Investment Research (zacks.com).
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