Markets reacted strongly to the weaker than expected June inflation report, raising hopes among traders that the Federal Reserve will cut interest rates, especially Sensitive to high interest rates.
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 (New York Stock Exchange:International Hydrology) rose 3.3%, its best one-day return since mid-December 2023. Gold rose 1.7%. Long-term government bonds 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 Homebuilders ETF (New York Stock Exchange:translation) rose 6.7% in one day, its best one-day performance since mid-December 2023. SPDR S&P Regional Bank ETF (New York Stock Exchange:Clé) rose 3.4%. Gold mining stocks VanEck Gold Miners ETF (New York Stock Exchange:GDX) rose 2.4% and is on track to close at its highest level since April 2022.
Bitcoin (Crypto: Bitcoin) 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 Benzinga Pro Data:
-
of SPDR S&P 500 ETF Trust (New York Stock Exchange:spy) fell 0.9% to $556.201.
-
of SPDR Dow Jones Industrial Average (New York Stock Exchange:Diamonds) 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 (New York Stock Exchange:XLRE) rose 2.5% Technology Select Sector SPDR Fund (New York Stock Exchange:XLK) slumped, 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.n (NYSE:SBA) Alexandria Real Estate Equities, Inc. (New York Stock Exchange:teeth), both up 6.5%.
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PepsiCo(NYSE:Pep) rose 0.4% following its quarterly earnings report.
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Other stocks that reacted to earnings were Delta Airlines (New York Stock Exchange:Dal), ConAgra Brands Inc. (NYSE:CAG), up 0.4% and down 2%, respectively.
-
Caesars Entertainment Co., Ltd. (Nasdaq:CZR) rose 6.7%.
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This article Tech stocks plummet as small caps, REITs and gold miners rise. Weak June inflation raises hopes of rate cuts. What will move the markets on Thursday? Originally Benzinga
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