Stocks Fall As Hot Inflation Data Derails Fed Cut Bets, Bonds Tumble, VIX Rallies, Oil Tops $80: What's Driving Markets Thursday? (CORRECTED)

Editor’s note: This story has been corrected to reflect that Fisker is reportedly considering bankruptcy, but has not filed for bankruptcy.

Traders received a cold shower on Thursday as hopes for a rate cut were dashed, with February’s Producer Price Index (PPI) inflation figure significantly exceeding expectations, adding to concerns raised by robust consumer inflation data earlier in the week.

During morning trading hours in New York, major U.S. equity indices turned negative, driven by a sharp increase in U.S. Treasury yields.

The 30-year Treasury note yields rose by 9 basis points to 4.44%, marking the highest level since late February. The iShares 20+ Year Treasury Bond ETF TLT, the world’s largest bond ETF, declined by 1.4%, poised for its sixth consecutive day of losses, marking the longest losing streak since last August.

Traders tempered their expectations for rate cuts, now anticipating only an 80-basis-point reduction by year-end, equating to just three cuts of 25 basis points each. Market-implied probabilities of a rate cut by June decreased from nearly 70% to 62%, according to the CME Group FedWatch tool.

While the S&P 500, Nasdaq 100 and Dow experienced relatively modest losses ranging between 0.3% and 0.4%, the CBOE Volatility Index, or VIX, surged by over 6%. In contrast, small caps, as tracked by the iShares Russell 2000 ETF IWM, underperformed large caps, declining by 1.7%.

Bitcoin fell by nearly 3% to $71,000, while gold slid by 0.8% to $2,160 per ounce. Oil prices surged, with West Texas Intermediate (WTI) rising by 2% to over $80, following a report from the International Energy Agency (IEA) indicating that oil markets are likely to face a supply deficit for the remainder of the year due to OPEC+ production cuts.

Thursday’s Performance In US Major Indices, ETFs

The SPDR S&P 500 ETF Trust SPY was 0.4% lower to $513.80, the SPDR Dow Jones Industrial Average DIA inched 0.4% lower to $389.91 and the tech-heavy Invesco QQQ Trust QQQ fell 0.4% to $438.47, according to Benzinga Pro data. 

Sector-wise, the Energy Select Sector SPDR Fund XLE, was the only positive performer for the day, up by 1%. The Real Estate Sector SPDR Fund XLRE was the laggard, down 2%.

Thursday’s Stock Movers

• Tesla Inc. TSLA fell nearly 4% after UBS lowered the EV maker’s price target from $225 to $165.
• Nvidia Corp. NVDA fell 3.8%, reflecting the weaker momentum in AI-related stocks.
• Crypto-related stocks Marathon Digital Holdings Inc. MARA, Coinbase Global Inc. COIN and Riot Platforms Inc. RIOT all dropped by 8%.
• Robinhood Markets, Inc. HOOD rose 5% in reaction to the trading app’s February financial metrics.
• Halliburton Company HAL rose 2.6% in response to rising oil prices, setting the best daily performance among S&P 500 stocks.
• Lennar Corp. LEN fell over 5% following its latest earnings report.
• Fisker Inc. FSR slumped about 50% on reports the company is considering bankruptcy.
• Other companies reacting to earnings were DICK’S Sporting Goods, Inc. DKS, up 15%, Dollar General Corporation DG, down 5%, G-III Apparel Group, Ltd. GIII, down 13%, Weibo Corporation WB, down 2.7%.
• Those reporting after the close include Adobe Inc. ADBE, Blink Charging Co. BLNK, Smartsheet Inc. SMAR, PagerDuty, Inc. PD, Cardlytics, Inc. CDLX, Ulta Beauty, Inc. ULTA and Zumiez Inc. ZUMZ

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