What the stock market gives, the stock market takes away. U.S. stocks opened lower
and bond yields
rose after producer prices accelerated by 0.3% in July. A big driver of that rise was the producer price index’s portfolio-management line item, which spiked 7.6%.
A Labor Department official explained what the driver of that gain was: the stock market. Specifically referencing the Wilshire 5000 index
the official noted that the index rose by 6.7% in June and by 10.3% for the second market. Since the market did so well, the fees portfolio managers received rose because their assets under management had risen. The good, or bad, news is that the Wilshire hasn’t done as well since then. The index rose 3.5% in July, and so far has dropped 2.8% in August, according to FactSet data. Veronica Clark, an economist at Citi, said this category in PPI had lagged market gains this year. “Given such a substantial increase, we would not be surprised to see some pullback in the next few months, but part of this strength likely does reflect some catch-up from previous months of surprising weakness,” Clark said.