Tech Takes a Tumble as Inflation Cools
The stock market experienced a shift on Thursday, July 11, 2024, as investors rotated out of tech stocks following a surprising drop in consumer prices. This marked the first monthly decline in inflation since 2020, prompting speculation about potential interest rate cuts.
The S&P 500 fell by 0.9%, retreating below the 5,600 mark after reaching a new high the previous day. The tech-heavy Nasdaq Composite suffered the most, dropping almost 2%.
Big Tech giants like Nvidia (NVDA), which saw its shares fall by over 5%, were particularly affected. The "Magnificent 7" group of stocks, consisting of tech behemoths, experienced their worst day in nearly a year.
Tesla (TSLA) shares also took a hit, plummeting over 8% after a Bloomberg report revealed a delay in the unveiling of its robotaxi. This marked the EV maker's worst day since January.
Inflation Cooling Fuels Rate Cut Bets
The June Consumer Price Index (CPI) report showed a 0.1% decline in prices compared to the previous month, with the annual increase slowing to 3%. This unexpectedly favorable inflation data boosted expectations that the Federal Reserve might begin cutting interest rates as early as September.
Interest rate-sensitive sectors like Real Estate (XLRE) and Utilities (XLU) saw an influx of investment, indicating investor optimism about lower interest rates.
Earnings Season Begins
The upcoming week will see the start of another earnings season, with JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) reporting their second-quarter results on Friday.
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