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The Nasdaq fell dramatically on Thursday as investors moved into smaller businesses after softer-than-expected inflation data fanned speculation that the Federal Reserve would drop interest rates in September.
The S&P 500 also dipped as the Labor Department reported surprisingly low June consumer prices and the weakest annual gain in a year, pushing the Fed closer to a September rate reduction. The Dow rose slightly.
According to CME Group’s Fedwatch interest rate futures indicate a 90% likelihood the Fed will lower rates by September, up from 74% on Wednesday.
Despite falling inflation, Wall Street’s most valued businesses lost ground, with Microsoft, Amazon and Meta Platforms each down more than 2%.
Tesla down 8.4%, its worst one-day percentage decrease since January, after Bloomberg News reported it will postpone robotaxi’s deployment until October.
Apple slumped 2.3% after reaching a record high on Wednesday. BofA Global Markets boosted its Apple price target, expecting robust iPhone sales powered by new AI capabilities.
Smaller firms rose Thursday while tech stocks sank.
The small-cap Russell 2000, which has underperformed the benchmark index in 2024, rose 3.6% to its highest level since March 2022 on expectations that rate cuts will help smaller firms.
I think investors think the Fed is poised to decrease rates. So they respond, “That’s enough for me.” “I don’t have to wait for them to do it,” said CFRA Research chief investment strategist Sam Stovall.
U.S. exchanges traded 12.6 billion shares, up from 11.5 billion in the preceding 20 days.
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