Stock Market Today: Dow, S&P 500, Nasdaq Set to Open Down Ahead of CPI Inflation Report; Nvidia, Tesla, PepsiCo, Palantir, Delta, More Movers; Treasury Yields

The consumer price index climbed 3% year over year in June, according to data released Wednesday by the Bureau of Labor Statistics. The data suggest that pricing pressures are indeed sustainably easing back to the central bank’s 2% target.

Economists surveyed by FactSet had expected prices rose 3.1% last month, compared with May’s 3.3% pace.

Headline inflation declined outright by 0.1% on a monthly basis in June, while economists expected a 0.1% increase in prices. By contrast, price growth was flat in May.

For live coverage and analysis of the CPI report, click here.

The stock market couldn’t have hoped for a much better inflation report, so why is the S&P 500 down? Traders appeared to be selling the stocks that pushed the index to record highs and buying many of the market laggards.

The Magnificent Seven group of megacap technology stocks were almost all down in recent trading; Nvidia was down 3.2%; Meta Platforms was down 2.3%; Microsoft was down 2%; Alphabet was down 1.6%; Amazon.com was down 1.4%; while Apple was down 1.5%. Tesla was the only member of the group up, with a gain of 1.1%.

With the S&P 500 down 0.3%, a whopping 410 of its members were rising on the day. The Invesco S&P 500 Equal Weight ETF, a proxy for index breadth since each member stock is weighed the same, was up 1.2%. That’s the kind of staggering breadth that you’d expect to push the market higher. The Russell 2000 was up 2.7%, on track for its best day of the year.

With bond yields sliding, rate-sensitive sectors were shining. The S&P 500 real estate sector was up 2.6%, while utilities were up 1.6%. Materials were up 1.1%. The only sectors declining were information technology, communication services, and consumer staples, down 1.5%, 1.4%, and 0.7%, respectively.

Though other stocks are picking up the slack as the Mag 7 slid, the relative weight of the megacap tech stocks has clouded what could have been a strong day of gains.

Small caps are loving the pullback in bond yields in the wake of a cool inflation report.

The Russell 2000 was up 2.8% on a day when the three major U.S. indexes were struggling to build on recent gains. The Russell 2000 is now up 4% year to date.

The Russell 2000 was on pace for its best day since Dec. 13, when it rose 3.5%, according to Dow Jones Market Data.

It was beating the Nasdaq Composite by 3.71 percentage points, which would be its large one-day outperformance of the tech-heavy index since Jan. 6, 2021. It was beating the Dow by 2.64 percentage points, its largest one-day outperformance since Nov. 14, according to Dow Jones Market Data. It was beating the S&P 500 by 3.14 percentage points.

The consumer price index dipped 0.1% in June from May, sending bond yields falling fast. Rate-sensitive sectors like real estate and utilities were surging.