NASDAQ 100, Dow Jones, S&P 500: Wall Street Grappling with Surging PPI, Tech Losses

Highlights

• U.S. PPI climbs 0.8%, surpassing expectations.
• Tech giants like Tesla, Nvidia face significant losses.
• Market eyes Federal Reserve’s decisions amid inflation.

Overview

Wall Street felt the tremors on the cash market opening on Friday as the U.S. producer price index (PPI) exceeded expectations, igniting apprehensions about persistent inflation. This surge in prices coupled with rallying bond yields weighed heavily on the market’s tech giants, signaling deeper concerns for the near future. Early in the session, the Dow is posting a modest gain, accompanied by losses in the S&P 500 and Nasdaq Composite.

Persistent Inflation & Rate Concerns

July witnessed the U.S. PPI climbing 0.8% in a 12-month span, a notable leap from the preceding month’s 0.2%. This rise, spurred predominantly by increasing service costs, surpassed the 0.7% gain predicted by Refinitiv economists. Such figures have bred skepticism regarding the Federal Reserve’s stand on credit conditions, evident as September’s no rate hike bets slipped slightly post this data release. The PPI data paints a vivid picture: inflation concerns are very much alive, even though there are visible advancements in the CPI spectrum.

Bond Yields & Tech Stocks

The implications of these inflation figures spilled into the bond market. The 2-year treasury note yield, reflecting near-term interest rate sentiments, escalated to 4.88%. This rise exerted pressure on tech stalwarts, notably rate-sensitive ones. Tech titans like Tesla, Nvidia, and Microsoft experienced losses ranging from 1.0% to 3.1%, displaying the market’s bearish sentiment towards them.

Market Movement & Company Headlines

The ripple effects were felt in sectors across the board. The semiconductor sector saw over a 2% drop, setting them up for a possible weekly plunge of 4.5%. Meanwhile, Maxeon Solar Technologies reported a significant revenue miss, indicating weakening demand. On the global front, U.S.-listed shares of Chinese enterprises took a hit after property behemoth Country Garden’s profit warning. Other companies making the news included News Corp, UBS, and Kura Oncology, with varied financial outcomes and forecasts.

Short-term Forecast

Given the prevalent data and underlying market sentiment, the upcoming days might see a cautious approach from investors. With consistent inflation figures, all eyes will be on the Federal Reserve’s decisions, impacting the broader market trajectory. Rate-sensitive sectors, particularly tech, could experience heightened volatility. Investors are advised to remain vigilant, monitoring these key indicators closely to navigate the unpredictable waters ahead.