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Another wave of positive earnings and economic data is sending the major equity indices higher, with the Dow Jones Industrial Average trending to close at another all-time high. The biggest gainer in the Dow Jones today was Intel (INTC); its earnings and strong guidance caused the semiconductor index to jump almost 4% in the session. Joy Global (JOY) has reached 52-week highs causing most machinery names to climb higher, despite industrial production slowing a bit, yet remaining strong. As the session continues, the market is set to close higher, even with the Beige Book release out at 2:00 PM today.

The Bureau of Labor Statistics released its monthly reading of the Producer Price Index (PPI), which measures the average change over time in the prices received by domestic producers of goods and services. After declining in May, inflation among producer prices rebounded notably in June, although we note that the increase in price was mostly energy-related. Overall, total PPI increased to 0.4% in June after a decline of 0.2% in May and was slightly higher than consensus' estimate at 0.3%. However, excluding high-inflation components (i.e. food and energy), the Core PPI came in at 0.2% in June after declining 0.1% in May, in-line with consensus' expectations. Although not included on the chart below, total final demand excluding food, energy and trade services increased 0.2% in June after no change in May. Energy prices jumped a monthly 2.1% after dipping 0.2% in May, and food prices declined 0.2% in both June and May. Prices for final demand goods jumped 0.5%, following a decrease of 0.2% in May. In June, a 6.4% advance in gasoline prices accounted for most of the increase in the final demand goods index. We note that although monthly PPI numbers have been volatile due to drastic shifts in the price of energy, the overall trend is still moderate long-term.

Also, on the industrial side, production slowed in June to an increase of 0.2%, following a jump of 0.5% in May, coming in lower than consensus at 0.4%. The manufacturing component of the index decelerated to a modest 0.1% gain after jumping 0.4% in the prior month while consensus also expected an increase of 0.4% in May. Mining activity continues to be healthy, with a 0.8% increase after a 1.1% surge in May. Utilities actually declined again by 0.3%, following a drop of 0.4% in May. Core manufacturing, excluding motor vehicles, increased 0.2% in June after a 0.3% rise in May. However, the overall capacity utilization rate held steady at 79.1, slightly lower than the consensus projection for 79.2. For Q2 as a whole, manufacturing production rose at an annual rate of 6.7% after increasing 1.4% in the first quarter. This sizable pick-up in activity is not only encouraging for industrial stocks, but it also suggests that second quarter GDP will rebound nicely from the first quarter's weather-related dip.