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Nasdaq Ends 2% Lower as Nvidia Weighs

Nasdaq Ends 2% Lower as Nvidia Weighs
Traders on the floor of the New York Stock Exchange (Specer Platt/Getty Images)

Thursday, 11 July 2024 04:07 PM EDT

Nasdaq ended sharply lower 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 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.

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, including Microsoft, Meta Platforms and Amazon.

Tesla tumbled after Bloomberg News reported the company is delaying the launch of robotaxi by about two months to October.

Apple fell after hitting 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, which has significantly lagged the benchmark index in 2024, jumped to an over three-month high, 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.

According to preliminary data, the S&P 500 lost 49.75 points, or 0.88%, to end at 5,584.16 points, while the Nasdaq Composite lost 364.04 points, or 1.95%, to 18,283.41. The Dow Jones Industrial Average rose 38.24 points, or 0.07%, to 39,748.69.

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.

The S&P 500 real Estate index surged, trimming year-to-date losses to about 1%. The communication services and information technology indexes each fell sharply.

Delta Air Lines slumped 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 down at one more almost 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 slipped after U.S. bank regulators fined the lender $136 million.

Conagra Brands fell after the packaged foods maker forecast annual revenue and profit below estimates.

© 2024 Thomson/Reuters. All rights reserved.


StreetTalk
Nasdaq ended sharply lower 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.
financial markets
459
2024-07-11
Thursday, 11 July 2024 04:07 PM
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