4.15pm: Nvidia and Tesla lead tech losses
US stocks came off their highs on Thursday as investors rotated out of tech after an unexpected drop in consumer prices for the first time since 2020.
At the close, the S&P 500 fell 0.9% to finish at 5,585 points, the Dow Jones rose 0.1% at 39,754, and the tech-heavy Nasdaq dropped nearly 2% at 18,283.
Major tech stocks, including Nvidia and Tesla, saw significant losses, with Tesla dropping over 8% after news of a delay in its robotaxi unveiling.
Investors shifted to rate-sensitive sectors like Real Estate and Utilities following the cooler-than-expected inflation report, which fueled expectations of a Federal Reserve interest rate cut by September.
“For the tech sector, which has already enjoyed a strong period this month, there was little extra good news in the US inflation print,” IG’s Chris Beauchamp commented. “But for small caps, which have struggled all year, the news offered a real shaft of light.
“A Fed September rate cut is now much more likely, CPI perhaps completing the picture begun last week with the weaker payrolls report.”
12.45pm: Big tech leads rout
The US tech megacaps of the so-called Magnificent Seven led a faster retreat on Wall Steet into the afternoon.
Traders were pointing to potentially the biggest one-day fall in market valuation for the tech septet in nearly two years.
Tesla, down 5.1%, followed by Nvidia and Meta Platforms both down around 3.5%, led the falls, with Microsoft, Alphabet and Amazon all down 2.5% or worse, with Apple 1.9% lower.
This added up to over half a trillion of value lost in a single-day.
As for the major indices, the Nasdaq Compisite was down 1.8%, the S&P 500 down 0.9% and the Dow Jones was flat.
10.37am: Stocks and dollar drops
The Nasdaq and S&P 500 dove lower after initially hitting new highs at the open, as investors mulled the earlier inflation data.
Led by falls from Apple, Microsoft, Nvidia and most of the tech giants, the Nasdaq Composite fell 1% to below 18,500, with the S&P 500 down 0.40%.
The dollar was down too, falling 0.58% versus the pound, 0.44% against the euro and with the DXY dollar index dropping 0.64% to 104.38.
9.37am: US inflation lower than expected
Some good news for US consumers and central bankers as the annual rate of inflation was shown to have cooled last month, though stocks don't know what to make of it yet, with major Wall Street indices searching for direction in the early minutes.
CPI fell to a 3.0% in June, marking the lowest point in a year and undershooting forecasts of 3.1%.
According to the Bureau of National Statistics, energy costs rose at a slower pace than anticipated, driven by declines in gasoline and fuel oil, although utility gas service costs did accelerate.
Inflation eased for shelter and transportation and stayed flat for apparel, while prices continued to decline for new vehicles and used cars.
Food prices, on the other hand, edged up 2.2%.
The data could prompt traders to increase the chances of a near-term interest rate cut following this data print, if not at the Federal Reserve's next meeting on 31 July, then at the September get-together.
“The Fed will cut soon,” Pantheon Macroeconomics chief economist Ian Shepherdson said, adding: “June’s CPI data bring more evidence of broad-based disinflation, giving the Fed the green light to ease multiple times this year.”
Bond prices improved immediately following the data price, with yields on the US 10-year Treasury note approaching four-month lows.
8.34am: Nasdaq set to lead gains again
US stocks are expected to come off from yesterday’s record highs when markets open today.
The Nasdaq 100 flew to an all-time high following Federal Reserve chair Jerome Powell's optimistic comments about near-term interest rate cuts. Major tech companies like Nvidia, Apple, Microsoft, and Google leading the way.
Pre-market data implies around 20 points of losses on the Nasdaq when trading commences, bringing the tech-heavy index down to 20,646.
It is a big day for macroeconomic data, with inflation and employment data on the agenda.
On the company news front, PepsiCo Inc (NASDAQ:PEP, ETR:PEP) is set to fall after noting "subdued" North American snack demand in the second quarter.
Delta Air Lines Inc (NYSE:DAL), meanwhile, flew to record revenues, but its shares are set to fall 9% as earnings touched down 12% lower year on year.