WASHINGTON (dpa-AFX) - Stocks have moved sharply lower over the course of the trading day on Thursday, giving back ground following the rally seen in the previous session. The Nasdaq and the S&P 500 have pulled back firmly into negative territory after reaching record intraday highs in early trading.
Currently, the Nasdaq and the S&P 500 are lingering near their worst levels of the day. The Nasdaq is down 341.52 points or 1.8 percent at 18,305.93 and the S&P 500 is down 50.81 points or 0.9 percent at 5,583.10.
The narrower Dow, on the other hand, has spent much of the day lingering near the unchanged line and is currently up 27.29 points or 0.1 percent at 39,748.65.
While optimism about the outlook for interest rates contributed to early strength on Wall Street, buying interest waned shortly after the start of trading.
Traders may have seen the increased confidence in a September rate cut as already priced into the markets following yesterday's rally.
The subsequent sell-off came as traders took the opportunity to cash in on the recent strength in the markets, with some of the biggest tech winners of the year like AI darling Nvidia (NVDA) leading the pullback.
Nonetheless, the Federal Reserve is still seen as likely to lower rates in September after a report from the Labor Department showing showed prices in the U.S. unexpectedly edged slightly lower in the month of June.
The Labor Department said its consumer price index slipped by 0.1 percent in June after coming in unchanged in May. Economists had expected consumer prices to inch up by 0.1 percent.
The unexpected dip by consumer prices came as another steep drop by gasoline prices more than offset a continued increase in shelter costs.
Excluding food and energy prices, core consumer prices crept up by 0.1 percent in June after rising by 0.2 percent in May. Core prices were expected to increase by another 0.2 percent.
The report also said the annual rate of consumer price growth slowed to 3.0 percent in June from 3.3 percent in May. Economists had expected the pace of price growth to decelerate to 3.1 percent.
The annual rate of core consumer price growth also slowed to 3.3 percent in June from 3.4 percent in May. The pace of growth was expected to remain unchanged.
'Today's CPI release should offer more confirmation for the data dependent - and hesitant - Fed to begin the interest rate easing cycle at its September 18 meeting,' said Quincy Krosby, Chief Global Strategist for LPL Financial.
Sector News
Semiconductor stocks have moved sharply lower over the course of the session, giving back ground following recent strength in the sector.
The Philadelphia Semiconductor Index has plunged by 3.1 percent, pulling back off the record closing high set on Wednesday.
Software and computer hardware stocks have also shown notable moves to the downside, contributing to the steep drop by the tech-heavy Nasdaq.
On the other hand, housing stocks continue to see substantial strength amid optimism about lower interest rates, resulting in a 5.1 percent spike by the Philadelphia Housing Sector Index.
Considerable strength has also emerged among gold stocks, as reflected by the 2.6 percent surge by the NYSE Arca Gold Bugs Index. The strength in the sector comes amid a sharp increase by the price of the precious metal
Interest rate-sensitive commercial real estate, telecom and utilities stocks are also seeing significant strength, while biotechnology stocks have also shown a strong move to the upside.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index advanced by 0.9 percent, while China's Shanghai Composite Index jumped by 1.1 percent and Hong Kong's Hang Seng Index spiked by 2.1 percent.
The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.4 percent, the French CAC 40 Index and the German DAX Index both climbed by 0.7 percent.
In the bond market, treasuries have moved sharply higher in reaction to the consumer price inflation data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 8.9 basis points at 4.190 percent.
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