Wall Street experienced a downturn as big tech companies faced a decline and energy prices rose, ahead of the release of crucial US inflation data that will impact the Federal Reserve’s future actions. The S&P 500 and Nasdaq 100 both saw losses, with chipmakers leading the way with a drop of 1%. Nvidia, a company that has seen significant growth this year due to the artificial intelligence boom, saw its shares slip by 4%. Megacaps such as Tesla, Amazon, and Meta Platforms also experienced declines. Additionally, the surge in European wholesale gas prices and the global increase in crude oil prices raised concerns about further inflationary pressures.
Mark Hackett, Chief of Investment Research at Nationwide, stated that “markets are vulnerable to a period of consolidation.” He pointed out that the rate environment is a challenging factor, and there is growing concern that institutional investors, who have maintained a conservative approach over the past year, are now becoming more aggressively long in their positions.
Traders decided to reduce their exposure to the market before the release of the US consumer price index (CPI). Economists surveyed by Bloomberg predicted that the report would show a 3.3% annual increase in inflation for July, marking the first acceleration since June 2022. The core measure, which excludes volatile food and energy prices, is expected to slightly ease to 4.7%. However, expectations for CPI have cooled compared to previous reports, according to a survey conducted by 22V Research. US investors have become more uncertain following a series of positive releases.
In conclusion, Wall Street experienced a decline as big tech companies faced losses and energy prices rose. Traders decided to reduce their exposure to the market ahead of the release of the US consumer price index, which is expected to show an increase in inflation. The outcome of this report will have a significant impact on the Federal Reserve’s future actions.