US benchmark equity indexes closed mostly higher Tuesday as markets assessed the latest producer price report and awaited official data on consumer inflation. The Dow Jones Industrial Average rose 0.5% to 42,518.3, while the S&P 500 increased 0.1% to 5,842.9. The Nasdaq Composite fell 0.2% to 19,044.4.
Utilities and financials led the gainers among sectors, while communication services and health care saw the biggest drops. In economic news, US producer price growth unexpectedly decelerated on a sequential basis last month as wholesale costs of services held steady, while goods' price gains cooled, the Bureau of Labor Statistics reported.
"A relatively more benign producer price report compared to expectations offers welcome relief for a Federal Reserve increasingly concerned about an acceleration in cost pressures," Stifel said in a note to clients. "While this morning's report does little to arrest the likelihood -- and need -- for a policy pivot near term, it does seemingly afford the Federal Open Market Committee more flexibility for policy as the data continue to evolve in the new year and under a new regime in Washington." BLS data are expected to show Wednesday that the US consumer price index rose 0.4% sequentially and 2.9% annually in December, according to a Bloomberg-compiled consensus.
Small business optimism in the US reached its highest level since October 2018, while the uncertainty index dropped, the National Federation of Independent Business' December survey showed Tuesday. "Small business owners feel more certain and hopeful about the economic agenda of the new Trump administration," NFIB Chief Economist Bill Dunkelberg said.
"Expectations for economic growth, lower inflation, and positive business conditions have increased in anticipation of pro-business policies and legislation in the new year." The US two-year yield decreased 3.5 basis points to 4.37%, while the 10-year rate lost 1.5 basis points to 4.79%. In company news, United Rentals agreed to acquire H&E Equipment Services in an all-cash deal worth roughly $4.8 billion as the equipment rental company aims to expand its capacity in the US.
United Rentals shares jumped 5.9%, the top gainer on the S&P 500, while H&E Equipment surged 106%. Celanese was the second-best performer on the S&P 500, up 5.4%, as BofA Securities upgraded the stock to buy. Eli Lilly shares dropped 6.6%, the worst performer on the S&P 500, after the drugmaker lowered fourth-quarter and full-year revenue expectations amid slower-than-expected growth in its US incretin division.
Boeing saw the steepest decline on the Dow, down 2.1%, after the plane maker's fourth-quarter and 2024 orders more than halved from a year earlier, with deliveries also dropping. West Texas Intermediate crude oil fell 1.3% to $77.8 a barrel Tuesday. Gold rose 0.5% to $2,691.80 per troy ounce, while silver gained 0.8% to $30.55 per ounce..