InfoQuest – The Dow Jones Industrial Average closed slightly higher on Thursday (July 11), while the Nasdaq Composite Index fell sharply. The market was pressured by investors selling shares in big technology companies. They turned to buying small-cap stocks after the US released lower-than-expected inflation data, prompting the market to expect the Federal Reserve to cut interest rates in September.
The Dow Jones Industrial Average closed at 39,753.75, up 32.39 points, or +0.08%, the S&P 500 closed at 5,584.54, down 49.37 points, or -0.88%, and the Nasdaq Composite closed at 18,283.41, down 364.04 points, or -1.95%. %.
Reuters reported that the S&P 500 and Nasdaq fell as investors shifted their investments from the technology sector to lower-capitalization stocks and interest-rate-sensitive stocks, such as real estate and utilities, after the United States released lower-than-expected inflation data in June.
The consumer price index (CPI), which measures inflation in consumer spending, rose 3.0% in June on a yearly basis. That was below analysts’ expectations of 3.1% from 3.3% in May. The core CPI, which excludes food and energy, rose 3.3% in June on a yearly basis. That was below analysts’ expectations of 3.4% from 3.4% in May.
Following the release of the U.S. data, CME’s FedWatch tool showed that investors gave more than 90% weight to the Federal Reserve to cut interest rates at its September meeting. That’s up from 74% on Wednesday (July 10).
The Russell 2000, a broad gauge of low-capitalization companies that are more sensitive to interest rates, rose 3.6% to close at its highest level since March 2022, buoyed by investors’ hopes that a rate cut by the Federal Reserve will help support small-business incomes.
Seven of the 11 stocks in the S&P 500 closed in positive territory, led by real estate and utilities, which rose 2.66% and 1.83%, respectively, while technology and communications services fell 2.74% and 2.56%, respectively.
Big tech stocks fall, with Indian shares down 5.57%, Apple down 2.3%, Meta Platforms down 4.1%, Alphabet down 2.8% and Netflix down 3.67%.
Tesla shares fell 8.4%, their biggest one-day drop since January of this year, after Bloomberg reported that Tesla would delay deliveries of its self-driving robotaxi for another two months.
Delta Air Lines Inc. shares fell 4% after the company reported lower-than-expected earnings for the current quarter. At the same time, shares of other airlines also fell. Airlines in the S&P 500 fell 2.7%.
Investors will be watching the release of the US Producer Price Index (PPI) today (July 12), as well as earnings reports from JPMorgan, Citigroup and Wells Fargo.
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