U.S. Stocks Move To The Downside Ahead Of Inflation Data
Stocks fluctuated over the course of the trading session on Wednesday before ending the day mostly lower. The major averages all moved to the downside, with the Nasdaq and the S&P 500 falling to their lowest closing levels in a month.
The major averages came under pressure going into the close, finishing the session firmly in the red. The tech-heavy Nasdaq slumped 162.31 points or 1.2 percent to 13,722.02, the S&P 500 slid 31.67 points or 0.7 percent to 4,467.71 and the Dow fell 191.13 points or 0.5 percent at 35,123.36.
The lower close on Wall Street came as traders remained cautious ahead of the release of a key report on consumer price inflation on Thursday.
Economists expect the report to show consumer prices rose by 0.2 percent in July, matching the uptick seen in June. Core consumer prices, which exclude food and energy prices, are also expected to rise by 0.2 percent for the second straight month.
The annual rate of consumer price growth is expected to accelerate to 3.3 percent in July from 3.0 percent in June, while the annual rate of core consumer price growth is expected to hold at 4.8 percent.
Traders will be looking for the report to reinforce expectations that the Federal Reserve will leave interest rates unchanged next month.
CME Group’s FedWatch Tool is currently indicating an 86.5 percent chance the Fed will leave rates unchanged in September.
Computer hardware stocks saw substantial weakness on the day, contributing to the steep drop by the tech-heavy Nasdaq. Reflecting the weakness in the sector, the NYSE Arca Computer Hardware Index plunged by 4.4 percent.
Super Micro Computer (SMCI) led the way lower plummeting by 23.4 percent after reporting better than expected fiscal fourth quarter results but providing disappointing revenue guidance for fiscal 2024.
Significant weakness was also visible among airline stocks, as reflected by the 2.6 percent slump by the NYSE Arca Airline Index. The index fell to its lowest closing level in two months.
Semiconductor, financial and networking stocks also saw considerable weakness on the day, while energy stocks bucked the downtrend amid a sharp increase by the price of crude oil.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index fell by 0.5 percent, while Hong Kong’s Hang Seng Index rose by 0.3 percent.
Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index climbed by 0.5 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index advanced by 0.7 percent and 0.8 percent, respectively.
In the bond market, treasuries saw modest strength after ending the previous session notably higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.4 basis points to 4.012 percent.
Trading on Thursday is likely to be driven by reaction to the report on consumer prices, although a report on weekly jobless claims may also attract some attention.
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