Nasdaq ends sharply lower as investors rotate out of Big Tech
CPI shows inflation eased in June
Wall Street heavyweights drop, small caps rally
Airlines slump after Delta results
S&P 500 -0.88%, Nasdaq -1.95%, Dow +0.08%
Updates with price moves and volume
By Noel Randewich and Lisa Pauline Mattackal
July 11 (Reuters) -The Nasdaq .IXIC ended sharply lower on Thursday, hit by losses in Nvidia, Apple and Tesla as investors rotated into smaller companies after softer-than-expected inflation data fed bets the Federal Reserve will cut interest rates in September.
The S&P 500 .SPX also lost ground after a Labor Department report showed U.S. consumer prices fell unexpectedly in June and the annual increase was the smallest in a year, drawing the Fed closer a September rate cut. The Dow finished with modest gains.
Interest rates futures suggest traders see an over 90% chance the Fed will cut rates by its September meeting, up from about 74% on Wednesday, according to CME Group's Fedwatch.
Despite signs of receding inflation, Wall Street's most valuable companies lost ground, with MicrosoftMSFT.O and Amazon AMZN.O each losing more than 2% and Meta Platforms META.O dropping about 4%.
Tesla TSLA.O tumbled 8.4%, its biggest one-day percentage drop since January, afterBloomberg News reported the company is delaying the launch of robotaxi by about two months to October.
Apple AAPL.O fell 2.3% afterhitting a record high on Wednesday. BofA Global Markets raised its price target for Apple, saying it expects strong iPhone sales driven in part by new AI features.
As sky-high tech-related stocks fell on Thursday, shares of smaller companies rallied.
The small cap Russell 2000 .RUT, which has significantly lagged the benchmark index in 2024, jumped 3.6%to close at its highest since March 2022, with investors betting rate cuts would improve conditions for smaller companies.
"What I think investors now believe is that the Fed is ready to start to cut interest rates. And so they are saying, 'That's good enough for me. I don't have to wait for them to actually do it'," said Sam Stovall, chief investment strategist at CFRA Research.
Volume on U.S. exchanges was heavy, with 12.6 billion shares traded, compared to an average of 11.5 billion shares over the previous 20 sessions.
The S&P 500 declined 0.88% to end the session at 5,584.54 points.
The Nasdaq declined 1.95% to 18,283.41 points, while Dow Jones Industrial Average rose 0.08% to 39,753.75 points.
Thursday's declines ended a seven-day streak of record high closes for the Nasdaq and a six-day streak for the S&P 500. It was the Nasdaq's biggest one-day percentage drop since April 30.
The S&P 500 real Estate index .SPLRCR surged 2.7%, trimming year-to-date losses to 1%. The communication services .SPLRCL and information technology .SPLRCL indexes each fell more than 2%.
Delta Air Lines DAL.N slumped 4%after forecasting lower-than-expected profits in the current quarter.
Other major airline stocks also fell, with an index of S&P 500 passenger airline companies .SPCOMAIR down 2.7%.
"This might be a place where consumers are getting pinched by inflation. That's showing up in discretionary funding on things like air tickets," said Scott Helfstein, head of investment strategy at Global X.
Investors are awaiting Producer Price Index data on Friday for insights into the inflation trajectory, along with second-quarter earnings from big banks.
Citigroup C.N slipped 1.9% afterU.S. bank regulators fined the lender $136 million.
Conagra Brands CAG.N fell 1.5% after the packaged foods maker forecast annual revenue and profit below estimates.
Advancing issues outnumbered falling ones within the S&P 500 .AD.SPX by a 3.7-to-one ratio.
The S&P 500 posted 51 new highs and 2 new lows; the Nasdaq recorded 141 new highs and 50 new lows.
S&P 500 components in 2024 https://tmsnrt.rs/45YY4hW
Reporting by Noel Randewich in Oakland, Calif., and by Lisa Mattackal and Ankika Biswas in Bengaluru; Editing by Pooja Desai and David Gregorio
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
