Stocks Turn To Losses, Bonds Rally On Falling Producer Prices, Rising Jobless Claims: What's Driving Markets Thursday?

Wall Street experienced a rude awakening the day after the Federal Reserve’s June policy meeting, as investors sold off risky assets and shifted to safer bonds and cash in response to the latest batch economic data.

Although May’s producer inflation was lower than expected, reinforcing the disinflation narrative and likely boosting the Fed’s confidence on the return to the 2% target, an unexpected increase in unemployment claims dampened risk sentiment, as investors fear symptoms of labor market weakness.

The S&P 500 Index was 0.2% lower, potentially snapping a three-day winning streak. The tech-heavy Nasdaq 100 marginally rose by 0.2%, aided by the positive performance of Broadcom Inc. AVGO, Tesla Inc. TSLA and Nvidia Corp. NVDA, as more than 80 tech members within the index traded in the red.

Blue chips fell 0.8%, while small caps, as tracked by the iShares Russell 2000 ETF IWM, tumbled 1.5% erasing all Wednesday’s gains.

Treasury yields continued to fall, with the 10-year yield reaching 4.25%, eyeing the lowest close since late March.

Long-duration bonds, followed by the popular iShares 20+ Year Treasury Bond ETF TLT are up 1.1% for the day, pushing the weekly performance to 2.2%, the highest since late January.

Despite traders increasing their bets on Fed rate cuts, the U.S. Dollar Index (DXY), tracked by the Invesco DB USD Index Bullish Fund ETF UUP, surprisingly rallied by 0.6%.

Fed futures currently indicate a 70% chance on a September rate cut, with traders eyeing 54 basis points of cumulative cuts by the end of the year.

Gold, impacted by the rising dollar, dropped 1% to $2,300 per ounce, while Bitcoin BTC/USD fell over 2% to $66,500, nearing its lowest close since May 19.

Thursday’s Performance In Major US Indices, ETFs

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY was 0.2% lower to $540.60.
• The SPDR Dow Jones Industrial Average DIA was 0.6% higher to $385.43.
• The tech-heavy Invesco QQQ Trust (ARCA: QQQ) was 0.2% higher to $475.49.
• Sector-wise, the Real Estate Select Sector SPDR Fund XLRE outperformed, up by 0.5%, while the Industrials Select Sector SPDR Fund XLI lagged, down 1.1%.

Thursday’s Stock Movers

• Broadcom Inc. rallied over 12%, eyeing its best 1-day performance since March 2020 after reporting stronger-than-expected profits and revenue last quarter.
• Tesla Inc. TSLA rose over 3% after shareholders approved proposals regarding Elon Musk‘s $56 billion compensation package and the company’s relocation to Texas.
• Warner Bros. Discovery Inc. WBD fell 6%, heading for its lowest close since early 2009, after Liberty Global Ltd. LBTY acquired the majority stake in the Formula E series by purchasing WBD’s rights.
• Meme stocks rose, with GameStop Corp. GME and AMC Entertainment Holdings Inc. AMC up 7.7% and 4.3%, respectively.
• Companies set to report their quarterly results after the close are Adobe Inc. ADBE and RH RH

Now Read: Ice Cold Producer Inflation Data Sparks Economist Reactions – ‘More Data In The Correct Direction’

Image: Midjourney