A lower-than-expected inflation report for June sparked wild market reactions, leading to a rise in traders’ expectations for a rate cut by the Federal Reserve and to boost assets that are particularly sensitive to higher interest rates. interest.
As the annual rate of inflation slowed from 3.3% to 3%, below the 3.1% forecast, and the monthly reading showed the first contraction (-0.1%) in four years, traders quickly increased their odds of a September rate cut, now setting a 92% chance.
Surprisingly, large-cap indexes such as the S&P 500 and the tech-heavy Nasdaq 100 fell, falling 0.9% and 2.1%, respectively, with the latter seeing its worst daily performance of 2024 since on April 30. These reactions suggest that market participants have likely already priced expectations of a rate cut into technology stock valuations and are now shifting from outperforming to lagging sectors.
The S&P 500 real estate sector’s outperformance against technology by more than 5 percentage points marked its biggest one-day relative change in more than four years, indicating a potential sector turnaround.
Other assets making significant moves included small caps, me iShares Russell 2000 ETF (NYSE:IWM) up 3.3%, its strongest one-day return since mid-December 2023; gold, with an increase of 1.7%; and long-dated treasury bonds, with iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) gaining 1.5%.
Capital industries that showed notable growth were those positively impacted by the prospect of lower interest rates. Homebuilders, tracked by SPDR Homebuilders ETF (NYSE:XHB), rose 6.7% on the day, their strongest one-day performance since mid-December 2023. Regional banks, represented by SPDR S&P Regional Banking ETF (NYSE:KRE), rose 3.4%. Gold miners, tracked by VanEck Gold Miners ETF (NYSE:GDX), rose 2.4%, on track for their highest close since April 2022.
Bitcoin (CRYPTO: BTC) was flat at $57,800.
Thursday’s performance of major US indices, ETFs
|
Main indexes |
PRICE |
%chg 1-day |
|
Russell 2000 |
2,120.27 |
3.4% |
|
Dow Jones |
39,754.72 |
0.1% |
|
S&P 500 |
5,583.95 |
-0.9% |
|
Nasdaq 100 |
20,246.76 |
-2.1% |
Updated at 1:05 PM ET
According to Benzinga Pro data:
-
of SPDR S&P 500 ETF Trust (NYSE:SPY) was 0.9% lower at $556,201.
-
of SPDR Dow Jones Industrial Average (NYSE:DIA) rose 0.1% to $397.59.
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Heavy technology Invesco QQQ Trust (ARCA: QQQ ) fell 2.1% to $492.83.
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In terms of sector, Real estate Choose the SPDR Sector Fund (NYSE:XLRE) performed better, up 2.5%, while Technology Select Sector SPDR Fund (NYSE:XLK) lagged behind, falling 2.4%.
Thursday’s stock movers
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Tesla Inc. ( TSLA ) fell more than 6% after Bloomberg pointed to delays in the Robitaxi project.
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The top performers within real estate stocks were Communications Corporationn (NYSE:SBA) Alexandria Real Estate Equities, Inc. (NYSE:ARE), both up 6.5%.
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PepsiCo Inc. (NYSE:PEP) was 0.4% higher, following quarterly earnings.
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Other stocks that reacted to earnings were Delta Air Lines Inc. (NYSE:DAL), ConAgra Brands Inc. (NYSE:CAG), down 0.4% and down 2%, respectively.
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Caesars Entertainment Inc. (NASDAQ:CZR) rose 6.7%.
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This article tech stocks fall as small caps, REITs, gold miners rally; Soft June Inflation Fuels Rate Cut Expectations: What’s Driving Markets Thursday? originally appeared on Benzinga.com
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