Wall Street saw a broad-based sell-off on Wednesday, with the exception of the technology sector, as investor optimism about progress in disinflation cooled following a mixed inflation report for August.
The Consumer Price Index (CPI) rose 2.5% year-on-year, slightly below the estimate of 2.6% and below July’s reading of 2.9%, marking the lowest inflation rate since February 2021. Most of this decline was in energy-related categories.
However, core inflation – excluding more volatile components such as food and energy – rose 0.3% month-on-month, beating expectations for a 0.2% reading. Annual core CPI remained at 3.2%, reflecting ongoing inflation in the services sectors.
Housing costs continue to be a key driver of inflation, rising by 0.5 percent month-on-month – the sharpest increase since January – and accounting for almost a third of the overall consumer price index.
The report dashed hopes that the Federal Reserve would cut interest rates at the upcoming meeting, with market expectations for a 50 basis point cut falling to just 13% from 34% the day before, according to CME FedWatch.
The inflation data boosted the US dollar and pushed up US Treasury yields across the board. The most interest rate-sensitive sectors such as real estate, commodities and financials were the main sell-offs.
In contrast, technology stocks defied the general market downturn, driven by strong gains in the semiconductor sector.
Nvidia Corp. (NASDAQ:NVDA) rose 4.5%, boosted by the market reaction to the recent U.S. presidential debate between Vice President Kamala Harris and former president Donald Trump.
The two candidates clashed over tariffs on goods that would affect inflation and the chip industry.
Solar stocks also recovered. Invesco Solar ETF (NYSE:TAN) rose over 4% as the prospect of a Harris administration boosted optimism about renewable energy policies. First Solar Inc. (NASDAQ:FSLR) was the industry best with gains of over 12%.
Elsewhere, gold prices remained unchanged, while oil prices recovered more than 2 percent after Tuesday’s sell-off. Bitcoin (CRYPTO: BTC) fell more than 2%.
Performance of the most important US indices and ETFs on Wednesday
|
Important indices |
Price |
1-day % change |
|
Nasdaq 100 |
18,865.96 |
0.2% |
|
S&P500 |
5,476.37 |
-0.3% |
|
Russell-2000 |
2,092.21 |
-0.5% |
|
Dow Jones |
40,436.47 |
-0.7% |
Updated at 12:50 ET
According to Benzinga Pro data:
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The SPDR S&P 500 ETF Trust (NYSE:SPY) fell 0.3% to $547.10.
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The SPDR Dow Jones Industrial Average (NYSE:DIA) fell 0.7% to $405.59.
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The technology-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) rose slightly by 0.2% to $459.93.
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The iShares Russell 2000 ETF (NYSE:IWM) fell 0.4% to $207.30.
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The Technology Selection Sector SPDR Fund (NYSE:XLK) exceeded expectations with an increase of 0.9%. Finance Select Sector SPDR Fund (NYSE:XLF) was the laggard, declining 1.4%.
The stockbrokers of Wednesday
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Share prices of lithium producers jumped on Wednesday after reports of production disruptions in China pushed up the price of the raw material. Albemarle Corp. (NYSE:ALB), one of the world’s largest lithium producers, rose 9.7% on the news.
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AppLovin Corporation (NASDAQ:APP) rose 8.6% to $93.63 after Bank of America analyst Omar Dessouky reiterated a Buy rating and raised the price target to $120 from $100.
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More information about Lucid Group Inc. (NASDAQ:LCID) rose 8.1% on optimistic comments from analyst John Murphy, CFA, who expects a large overall market for the Gravity SUV.
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GameStop Corp. (NYSE:GME) fell 13.8% as sales for the latest quarter fell short of expectations.
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Trump Media & Technology Group Corp. (NASDAQ:DJT) fell 12.8% in response to the presidential debate.
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This article “Stocks fall as inflation data dampens excitement over rate cuts, chipmakers and solar sector rise on Harris-led boost: What’s driving markets on Wednesday?” originally appeared on Benzinga.com
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