Global stock markets faced a downward trend on Friday due to a surprise uptick in US inflation data, which has sparked discussions about the Federal Reserve’s future interest rate policies. The US producer price index (PPI) for final demand increased by 0.3% in July, surpassing economist predictions of 0.2%. Moreover, the PPI rose by 0.8% over the 12 months through July, exceeding the anticipated 0.7%.

Earlier in the week, Wall Street’s primary indexes ended relatively flat, surrendering early gains following consumer price inflation data that was milder than expected. However, a concurrent survey revealed a significant increase in US consumer sentiment for July, reaching its highest level in nearly two years. The combination of lower inflation and a robust labor market contributed to the positive sentiment among consumers.

Despite the favorable consumer sentiment, John Augustine, Chief Investment Officer at Huntington National Bank, highlighted that the bond market’s response to inflation data triggered a ripple effect in the stock market. Augustine emphasized the significant influence of bond yields, stating that higher yields often put downward pressure on the tech-heavy Nasdaq index. Investors are currently closely monitoring developments related to the Federal Reserve, earnings projections, and fluctuations in oil futures.

Paul Christopher, Head of Global Investment Strategy at Wells Fargo Investment Institute, indicated that the inflation data suggests the Federal Reserve may need to maintain higher interest rates for a longer duration. Christopher pointed out that investors are scrutinizing inflation more closely, noting that while disinflation had been prominent in recent months, the rate of decrease seems to be stabilizing.

In the stock market, the Dow Jones Industrial Average managed to climb 105.25 points, representing a 0.3% gain and closing at 35,281.4. On the other hand, the S&P 500 experienced a slight dip of 0.11%, shedding 4.78 points to close at 4,464.05. Similarly, the Nasdaq Composite faced a decline of 0.56%, dropping 76.18 points to finish at 13,644.85. Notably, both the S&P 500 and the Nasdaq reached their lowest levels in a month earlier during the trading day.

For the week, the Dow experienced a notable increase of 6.2%. However, the S&P 500 recorded a modest decline of 0.3%, and the Nasdaq faced a more substantial 1.9% drop. This marks the first time in the year that both the S&P 500 and the Nasdaq have experienced consecutive weeks of losses.

The global stock market gauge, MSCI, saw a decline of 0.54%, with the weekly performance showing a 0.70% decrease. This marks the first instance of back-to-back weekly losses for the global index since May.

In terms of currencies, the US dollar strengthened, reaching 145.00 against the yen, its highest level since June 30. The Japanese yen experienced a 0.14% decrease against the US dollar, settling at 144.94 per dollar. The dollar index, which measures the dollar against major currencies, rose by 0.214%, with the euro declining by 0.32% to $1.0944. Meanwhile, the British pound displayed resilience, trading at $1.2698, marking a 0.18% increase for the day. This surge was supported by GDP data indicating unexpected growth in the second quarter, propelled by a strong performance in June.

Turning to US Treasuries, benchmark 10-year notes experienced an 8.4 basis point increase to 4.166%, compared to 4.082% on Thursday. The 30-year bond also saw a 3.9 basis point increase, yielding 4.2717%. The 2-year note followed suit with a 7.6 basis point increase, yielding 4.8968%.

In the realm of commodities, oil prices witnessed their lengthiest weekly gaining streak since June 10, 2022, driven by forecasts of tightening supplies from the International Energy Agency (IEA). US crude prices concluded the session with a 0.45% increase at $83.19 per barrel, while Brent crude settled at $88.81, marking a 0.47% gain for the day.