New Delhi, Aug. 13 -- WASHINGTON - The Bureau of Labor Statistics reported Wednesday that producer prices were unchanged in July, below the 0.2-percent rise that economists had forecast. Within minutes, the S&P 500 opened at 7,794.24, its highest level on record, adding 0.59 percent as investors read the flat reading as a signal that Federal Reserve rate cuts are getting closer.

The headline number has a complication hidden inside it. Core producer prices, the measure that strips out food, energy, and trade services, rose 0.4 percent in the month, the fastest monthly advance in three months. The gap between the zero headline and the 0.4-percent core frames the bind that Federal Reserve Chair Kevin Warsh now faces as inflation continues t...