The Nasdaq Composite and S&P 500 were down around midday Thursday as shares of chipmakers and airlines fell sharply, offsetting optimism that the Fed could soon cut interest rates as inflation continues to moderate.
The decline—the Nasdaq was off 1.8% and the S&P 500 was down 0.8%—threatens to end a seven-session winning streak for the two major indexes, which have hit a series of record highs since the start of the month. The Dow Jones Industrial Average was up 0.3% Thursday, nearing 40,000 points for the first time since mid-May.
The recent rally has been fueled by the strong performance of tech stocks and hopes the Fed will cut its benchmark fed funds interest rate soon.
On Thursday, however, tech stocks were leading the Nasdaq lower. AI investor darling Nvidia (NVDA) was down around 5%, as was Arm Holdings (ARM). Shares of Meta Platforms (META) and Apple (AAPL) were also lower.
Airlines were the biggest decliners on the S&P 500 after Delta (DAL) reported weaker-than-expected earnings and lowered its guidance. Shares of United (UAL), American (AAL) and other carriers fell as well.
Stocks had moved higher early in Thursday’s session after a government report showed that consumer prices surprisingly fell in June from the previous month, adding to expectations that the Fed will start cutting the federal funds rate soon. The Fed has said it’s waiting for more evidence that inflation is under control before easing policy, and Thursday’s report likely falls into that category.
Traders are now pricing in about a 95% chance that the Fed will start cutting interest rates in September, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data. That’s up from a 74% likelihood of a cut that was being priced in yesterday.
The yield on 10-year Treasurys fell to around 4.17% after the CPI release, down from near 4.3% before the report and at the lowest level since March.
Microstrategy Rises After Stock-Split Announcement
1 hr 29 min ago
MicroStrategy (MSTR), one of the world’s largest holders of bitcoin (BTC), said Thursday it is planning a 10-for-1 stock split, making it the latest company to announce a split.
Shares of MicroStrategy were up more than 3% in late-morning trading Thursday, bucking a broader downturn for stocks.
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Shares will be split for both MicroStrategy’s class A and class B shares for holders of record as of Aug. 1, with investors set to receive nine additional shares after markets close on Aug. 7 for each share they owned previously. The first day of MicroStrategy’s split-adjusted trading will be on Aug. 8.
While the split will not change the overall value of investors’ MicroStrategy holdings, by lowering the price of each MicroStrategy share, the split could help make the stock more accessible to investors and stimulate demand.
Shares in the company have more than doubled in value this year after the U.S. Securities and Exchange Commission’s approval of spot bitcoin ETFs in January turbocharged the token’s prices.
However, some of the excitement around bitcoin, which rose above $73,000 in March, has ebbed recently. The token is currently trading at a tight range below $60,000.
Delta Tumbles on Weak Earnings; Other Airlines Take a Hit
2 hr 52 min ago
Delta Air Lines shares fell sharply in early trading Thursday after the airline reported second-quarter profit that fell well short of estimates and lowered its guidance for the third quarter.
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Total revenue rose 7% from last year’s second quarter to a record $16.7 billion, which was better than the $16.2 billion analysts had projected, according to estimates compiled by Visible Alpha. However, Delta’s per-share profit of $2.01 sank 29% year-over-year, falling well short of the $2.39 expectation.
The company said that debt reduction remains Delta’s “top financial priority” heading into the second half of the year after spending $1.4 billion to pay down debts in the second quarter. Delta affirmed its full-year adjusted earnings per share (EPS) guidance of between $6 and $7 but forecast lower-than-expected adjusted earnings of $1.70 to $2.00 in the third quarter.
Shares of airline rivals United (UAL), American (AAL) and Southwest (LUV) also tumbled in early trading Thursday.
Stock Futures Lower Ahead of CPI Inflation Report
5 hr 17 min ago
Futures contracts connected to the Dow Jones Industrial Average were down 0.2% about half an hour before the release of the closely watched inflation data.
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S&P 500 futures slipped 0.1%.
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Nasdaq 100 futures were also off 0.1%.
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