Tech Stocks Lead Market Upsurge As Inflation And Fed Tightening Fears Diminish: Thursday's Market Movers

U.S. stocks are on track to post their fourth straight session of gains on Thursday, as lower-than-expected producer inflation reports reinforced market perceptions that pricing pressures have lost their grip on the economy, potentially lessening the Fed’s need to tighten interest rates further after July.

A measure of the U.S. dollar plummeted to levels unseen since mid-April 2022, while Treasury yields continued to soften as market bets on two Fed rate hikes this year collapsed.

Tech was the top performing sector, with all seven S&P 500 heavyweights in the green, led by Alphabet Inc. GOOG GOOGL, which gained 4.5%. Amazon Inc. AMZN jumped 2.6% to a 43-week high after reporting record sales during its Prime Day event.

Cues From The Thursday’s Session: 

The S&P 500 Index rose 0.5% breaking above 4,500, the highest level since the last week of April 2022. The Nasdaq 100 Index gained 1.3% surging to mid-January 2022 levels.

Blue-chip stocks in the Dow Jones Industrial Average edged 0.2% higher, while small caps in the Russell 2000 Index gained 0.9%.

Analyst Color:

Analysts offered differing perspectives on the market rally. Fund manager Louis Navellier said he sees the decline in Treasury bond yields as a "very good sign,” raising the likelihood of the Federal Reserve pausing at the July meeting. "I want to assure you that everything is about to get better," he said, adding that he expects a steady improvement in corporate earnings over the next four quarters.

On the other hand, Morgan Stanley’s Lisa Shalett warned of potential risks, citing bond volatility, surging interest rates, and a resilient U.S. dollar.

Thursday’s Trading In Major US Equity ETFs: In midday trading on Thursday, the SPDR S&P 500 ETF Trust SPY was 0.6% higher to $448.60, the SPDR Dow Jones Industrial Average ETF DIA rose 0.2% to $344.15 and the Invesco QQQ Trust QQQ was 1.3% higher to $377.64, according to Benzinga Pro data.

Almost all U.S. equity sectors were positive, except for the Energy Select Sector SPDR Fund XLE down 0.8%.

The Communication Services Select Sector SPDR Fund XLC rallied the most, up 1.6%, followed by Technology Select Sector SPDR Fund XLK, up 0.9%.

Latest Economic Data:

The Producer Price Index (PPI) for final demand recorded a 0.1% month-on-month rise in June, the Bureau of Labor Statistics said Thursday, rebounding from the revised 0.4% drop recorded in May but below the expected 0.2% rise.

In annual terms, PPI rose 0.1%, markedly down from May's downwardly revised 0.9% reading and well below the expected 0.4% figure. This marks the lowest annual PPI inflation rate since August 2020.

Core PPI inflation, which excludes foods and energy, ticked 0.1% higher on the month, in line with May's reading and below expectations of 0.2%. In annual terms, core PPI was 2.4%, lower than both the expected and May's 2.6%.

The Department of Labor reported a lower-than-expected increase in weekly unemployment claims (237,000 versus 250,000 forecast), also down from the prior week’s 249,000 print.

Fed Governor Christopher Waller is due to speak at 6:45 p.m. EDT.

See also: How To Trade Futures

Stocks In Focus:

• Viasat, Inc. VSAT shares tumbled 30% after the company said there was an anomaly during the deployment of its ViaSat-3 Americas satellite.
•  The Progressive Corp. PGR fell 12%, on track for its largest daily decline since October 2008, as the company reported lower-than-expected results last quarter.
• Crypto-related companies such as Marathon Digital Holdings, Inc. MARA, RIOT Platforms, Inc. RIOT and Coinbase Global, Inc. COIN all surged 10% following a decision by a U.S. District Court judge that Ripple (XRP) is not a security, sending the cryptocurrency up 30%.
• Carvana Co. CVNA fell over 7% after JP Morgan Securities downgraded the company and lowered the price target to $10.
• Delta Air Lines, Inc. DAL rose 2% after reporting record revenue and profit for Q2 and raising its earnings guidance above the Wall Street consensus estimate for next year. The company warned capacity constraints will remain for an “extended period,” paring the stock rally.

Commodities, Bonds, Other Global Equity Markets:

Crude oil rose 0.3%, with a barrel of WTI-grade crude trading at $75.90. The United States Oil Fund ETF USO was 0.3% higher to $68.  

Treasury yields fell, with the 10-year yield up by 9 basis points to 3.77% and the two-year yield up by 13 basis points to 4.62%. The iShares 20+ Year Treasury Bond ETF TLT was 0.9% higher for the day. 

The dollar fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.7%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.7% higher to 1.1200.

European equity indexes closed in the green. The SPDR DJ Euro SToxx 50 ETF  FEZ rose 1.5%. 

Gold rose 0.2% to $1,959/oz. The SPDR Gold Trust GLD was 0.1% higher to $182. Silver rose 2.6% to $24.70, with the iShares Silver Trust SLV up 0.5% to $22.70. Bitcoin BTC/USD was 1.7% higher to $30,882.

Staff writer Piero Cingari updated this report midday Thursday. 

Photo: Shutterstock