Market Overview
On Thursday morning, stock markets opened with declines, notably with the Dow Jones Industrial Average experiencing a drop of nearly 200 points, indicating a reaction to a surprising inflation report that came in higher than anticipated. The Dow ended up falling about 0.4% as investors processed the newly released producer price index (PPI) data. Concurrently, the S&P 500 index also declined approximately 0.3%, moving away from the record highs it had achieved just a day prior. The Nasdaq Composite, influenced by the inflation figures, fell around 0.2%.
Impact on Cryptocurrency
This shift in market sentiment, spurred by the concerning inflation figures, also had effects in the cryptocurrency markets, where major digital assets saw their values decrease sharply. The overall cryptocurrency market capitalization dropped by roughly 2.6%, settling just above $4 trillion. Bitcoin (BTC) fell to approximately $118,500, while Ethereum (ETH) retreated to close to $4,600, having briefly reached a historical peak of $124,457 earlier the same day before the inflation data release.
Producer Price Index Insights
The decline followed the publication of the July producer price index, which revealed that wholesale prices rose by 0.9% month-over-month, significantly above analysts’ consensus expectations of only a 0.2% increase. Year-over-year, producer prices surged by 3.3%, reaching their highest point since February 2025. The report also indicated that the “core” PPI, which excludes volatile food and energy prices, increased at levels not observed since June 2022.
Future Outlook
Despite the more pessimistic inflation figures, futures for federal funds still appeared optimistic, with market participants assigning a 93% likelihood of a rate cut by the Federal Reserve in September, a minor decline from the previous day’s 94%. Investors were hopeful that other market indicators could help the Dow recover some of its earlier losses; however, it was still down 98 points as of the latest updates. This morning’s economic data has reignited fears that the Federal Reserve may reconsider its planned interest rate adjustments due to potential inflationary pressures.
