PPI growth exceeds expectations, Nasdaq hits a new high, GME meme stock continues to rise

The U.S. Department of Labor announced yesterday that the Producer Price Index (PPI) for April increased by 0.5%, surpassing market expectations, indicating that inflationary pressures may take longer to ease. Federal Reserve Chairman Powell reiterated that the pace of inflation decline is slower than expected, which will likely keep the central bank on hold for an extended period. The tech-heavy Nasdaq closed at a historic high yesterday, driven by the return of Roaring Kitty, causing meme stock GameStop (GME) and its token GME to surge for the second consecutive day.

Powell Says Patience Will Extend as Inflation Slows

Jerome Powell, the Chair of the Federal Reserve, reiterated on Tuesday that the slower-than-expected pace of inflation would keep the central bank on hold for a longer period.

According to a report by CNBC, Powell stated during a speech at the annual meeting of the Foreign Bankers Association in Amsterdam:

We never thought this was going to be a flat road. But these inflation numbers are higher than I think anyone expected. That tells us we need to be patient and let the restrictive policies work.

While he expects inflation rates to come down this year, he hasn't seen that yet.

However, Powell also reiterated that he doesn't expect the Fed to raise interest rates.

PPI Higher Than Expected, Market Awaits CPI Data Release

The U.S. Department of Labor announced on the 14th that the Producer Price Index (PPI) for April rose by 0.5%, exceeding market expectations. With the surge in service prices, inflation pressures may take longer to ease.

The U.S. CPI inflation data will be released on Wednesday the 15th. Economists estimate that the overall CPI for April rose by 0.4%, primarily driven by a spike in gasoline prices to a six-month high. Despite the fading momentum in core goods prices, core service prices remain elevated. However, following the unexpected CPI increase last month, it is anticipated that the April CPI will see a slight relief.

According to the CME Group's FedWatch tool, the market currently expects the Fed to potentially start a rate-cut cycle after September.

Nasdaq Hits Record High, Meme Stocks Continue Surge

The Nasdaq, representing U.S. tech stocks, hit another all-time high at the close yesterday, reaching 16,511.18.

"Meme stock" GameStop (GME) surged by 60.10% on Tuesday to $48.75 per share. The GME token with the same name also surged by 70%. Roaring Kitty, who led the epic GameStop short squeeze event, posted stickers and a series of videos on X for the first time in three years, sparking FOMO sentiment in the community.

GameStop short squeeze figure Roaring Kitty returns, GME stock/token both skyrocket