Why Shares in Alcoa Surged This Week
Shares in bauxite, alumina, and aluminum products company Alcoa (NYSE: AA) were up 10% in the week as of 3 p.m. ET Thursday. The move comes based on an improvement in the outlook for aluminum prices.
It comes down to a combination of factors, but probably the most prominent was the 9.6% rise in the producer price index announced this week. The index measures the change in selling prices received for the output of domestic producers.
In a nutshell, the data confirmed fears that inflationary pressures are rising in the economy. Hence, investors sought out stocks that benefit from increases in raw material prices, such as Alcoa. In addition, Alcoa was boosted by the news that China's aluminum output fell in November compared to October. This was due to an explosion at a smelter and production cuts to meet climate aims (reducing greenhouse gas emissions) and responding to energy shortages.
Source Fool.com
