Wholesale Prices Climb; Consumer Sentiment Rebounds

Wholesale prices surged in October, largely as a result of higher costs for gasoline, cars and light trucks, according to a report from the government. On a busy day for economic data, separate reports showed consumer sentiment making a comeback, while industrial production slid.

The Labor Department's

producer price index rose 1.1%, including a 4.2% increase in energy prices. The core index, which excludes the food and energy components, rose 0.5%.

The PPI report, which measures inflation at the wholesale level, came in well above analysts' expectations of a 0.3% increase in the overall index and a 0.1% forecast for the core index.

Consumer Moods Improve

Consumers appear to be getting more optimistic, just in time for the holiday shopping season, according to the latest

consumer sentiment survey from the University of Michigan. The preliminary sentiment reading for November came in at 85, up from 80.6 in October. Analysts expected a reading of 82.

The increase was the first in six months. The current situation index rose to 93.8 from 92.4, and the expectations index rose to 79.2 from 73.1.

Industrial Output Slides

The

Federal Reserve

said

industrial production fell 0.8% in October, against economists' estimates for a decline of 0.4%. Automobiles, appliances and furniture lead the drop, but every major sector was down.

The report, which measures output at factories, utilities and mines, fell for the third month in a row. Industrial output for September was revised down to a 0.2% decline from the 0.1% drop originally reported.

Capacity utilization fell to 75.2% from September's revised level of 75.8%. Analysts expected utilization to slip to 75.6%.

Following the release of the data, U.S. Treasuries were mixed. The two-year note was flat, while the five-year and the 10-year were each losing 3/32. The 30-year bond was gaining 8/32.

Stock measures were modestly lower. The

Dow Jones Industrial Average

and the

S&P 500

were each declining by around 0.6%, and the

Nasdaq

was losing 1.5%.