Stocks Retreat, Nasdaq Hits 4-Week Low, Energy Sector Rallies: What's Driving Markets Wednesday?

U.S. stocks continue their downward trajectory on Wednesday, failing to reverse their negative momentum, as investors approach Thursday’s inflation data release with caution.

The Nasdaq 100 briefly touched its lowest point since July 11, experiencing a 1% drop as of midday trading.

Reviving concerns about inflation is the recent surge in energy prices. WTI crude oil has surged back to $83 per barrel, marking its highest level since November 2022, while natural gas surged by over 6%, hitting its highest level since the end of January 2023.

Economists are anticipating a rise in the annual inflation rate for July, with expectations moving from 3% to 3.3%. This would end a one-year stretch of declining prints in the annual CPI rate.

Cues From Wednesday's Trading:

The S&P 500 fell 0.6%, while the Dow Jones Industrial eased 0.4%. Tech and small caps were once again the weakest link in the stock market: the Nasdaq 100 and the Russell 2000 fell 1% and 0.9%, respectively.

US Index Performance On Wednesday

Wednesday’s Trading In Major US Equity ETFs: In midday trading on Wednesday, the SPDR S&P 500 ETF Trust SPY was 0.5% lower to $446, the SPDR Dow Jones Industrial Average ETF DIA fell 0.4% to $351 and the Invesco QQQ Trust QQQ was 0.9% lower to $368, according to Benzinga Pro data.

The Energy Select Sector SPDR Fund XLE was the outperformer, rising 1.22%. The Consumer Discretionary Select Sector SPDR Fund XLY and the Technology Select Sector SPDR Fund XLK were the laggards, down 1.1% each.  

Latest Economic Data:

The Mortgage Bankers Association reported a dip in its mortgage application volume by 3.1% last week, marking the third consecutive week of declines. The 30-year fixed mortgage rate rose to 7.09%, the highest since November 2022.

See also: What Are Futures Contracts

Stocks In Focus:

• Mirati Therapeutics, Inc. MRTX skyrocketed 30% amid better-than-expected Q2 results.
• PENN Entertainment, Inc. PENN climbed nearly 7% after it announced a partnership with Walt Disney Co.'s DIS ESPN to launch a sports betting venture named ESPN Bet. PENN said it sold 100% of the Barstool Sports back to David Portnoy in exchange for certain non-compete and other restrictive covenants.  Rival sports betting website DraftKings Inc. DKNG fell about 10%.
• Rivian Automotive, Inc. RIVN fell 8%, despite better-than-expected results last quarter, hit by widespread declines in the EV industry.
• Upstart Holdings, Inc. UPST fell 33%, on pace for the largest decline since May 2022, as the Q3 revenue outlook misses analysts’ forecasts.
Axon Enterprises, Inc. AXON posted a 14% gain, in response to upbeat results last quarter.
• Companies reporting after the close include Disney, Sonos, Inc. SONO, Trade Desk, Inc. TTD, Wynn Resorts Limited WYNN, Plug Power, Inc. PLUG, Illumina, Inc. ILMN, Alarm.com Holdings, Inc. ALRM and CarGurus, Inc. CARG.

Commodities, Bonds, Other Global Equity Markets:

Crude oil rose 0.4%, with a barrel of WTI-grade crude trading at $83. The United States Oil Fund ETF USO was 0.5% higher to $74.  

Treasury yields were broadly steady, with the 10-year yield down by 2 basis points to 4.01% and the two-year yield up by 3 basis points to 4.78%. The iShares 20+ Year Treasury Bond ETF TLT was 0.3% higher for the day. 

The U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, held steady. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.2% higher to 1.0978.

European equity indexes closed in the green, as the Italian government announced that the bank tax won’t amount to more than 0.1% of a firm’s assets. The SPDR DJ Euro STOXX 50 Etf  FEZ rose 0.4%. 

Gold fell 0.5% to $1,915/oz. The SPDR Gold Trust GLD was 0.3% lower to $182. Silver fell 0.5% to $22.6, with the iShares Silver Trust SLV down 0.6% to $20.78. Bitcoin BTC/USD was trading 0.9% lower at $29,510.

Staff writer Piero Cingari updated this report midday Wednesday. 

Read Next: US Inflation Preview: Experts Anticipate Both Disinflation Progress And Potential Surprises

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