Markets reacted sharply after June’s weaker-than-expected inflation report raised hopes among traders that the Federal Reserve would cut interest rates, sending assets especially sensitive to higher interest rates higher.
With annual inflation slowing to 3% from 3.3%, below the 3.1% forecast, and a monthly reading pointing to the first contraction in four years (-0.1%), traders have rapidly increased the likelihood of a September rate cut, now putting the probability at 92%.
Surprisingly, large-cap indexes such as the S&P 500 and the tech-heavy Nasdaq 100 fell 0.9% and 2.1%, respectively, with the latter coming off its worst daily performance of 2024 recorded on April 30. Such reactions suggest that market participants have already priced rate cut expectations into tech stock valuations and are now shifting investments from well-performing sectors to laggards.
The S&P 500 real estate sector outperformed the technology sector by more than 5 percentage points, its biggest one-day relative change in the past four years, signaling a possible sector shift.
Other assets that made big moves included small caps; iShares Russell 2000 ETF (NYSE: IWM) rose 3.3%, its best one-day return since mid-December 2023. Gold rose 1.7%. Long-term Treasuries iShares 20+ Year Government Bond ETF (NASDAQ:TLT) rose 1.5%.
The equity industry, which saw notable growth, was positively impacted by the prospect of lower interest rates. SPDR Home Builders ETF (NYSE:XHB) rose 6.7% for the day, its best one-day performance since mid-December 2023. SPDR S&P Regional Bank ETF (NYSE:KRE) rose 3.4%. Gold mining stocks VanEck Gold Miners ETF (NYSE:GDX) rose 2.4% and is on track to close at its highest level since April 2022.
Bitcoin (CRYPTO: BTC) was flat at $57,800.
Thursday’s performance of major U.S. stock indexes and ETFs
|
Key Indicators |
price |
Daily change rate |
|
Russell 2000 |
2,120.27 |
3.4% |
|
Dow Jones |
39,754.72 |
0.1% |
|
S&P 500 |
5,583.95 |
-0.9% |
|
Nasdaq 100 |
20,246.76 |
-2.1% |
Updated 1:05 p.m.
According to data from Benzinga Pro:
-
of SPDR S&P 500 ETF Trust (NYSE:SPY) fell 0.9% to $556.201.
-
of SPDR Dow Jones Industrial Average (NYSE:DIA) rose 0.1% to $397.59.
-
Technology-focused Invesco QQQ Trust (ARCA: QQQ) fell 2.1% to $492.83.
-
By sector, real estate Select Sector SPDR Fund (NYSE:XLRE) rose 2.5% Technology Select Sector SPDR Fund (NYSE:XLK) lagged, falling 2.4%.
Thursday’s stock price movements
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Tesla Inc. TSLA shares fell more than 6% after Bloomberg reported delays to the Robi-Taxi project.
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Top performers in real estate stocks Communications Co., Ltd.(NYSE:SBA) Alexandria Real Estate Equities, Inc. (NYSE:ARE), both up 6.5%.
-
PepsiCo(NYSE:PEP) rose 0.4% following its quarterly earnings report.
-
Other stocks that reacted to earnings were Delta Airlines (NYSE:DAL) and ConAgra Brands Inc. (NYSE:CAG) rose 0.4% and fell 2%, respectively.
-
Caesars Entertainment Co., Ltd. (NASDAQ:CZR) rose 6.7%.
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Image created using artificial intelligence via Midjourney.
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The article “Tech Stocks Slump, Small Caps, REITs, Gold Miners Rise as Rate Cut Hopes Riise on Weak June Inflation: What’s Moving the Market on Thursday?” originally appeared on Benzinga.com.
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