Stock market today: Stocks fall from records as Tesla, Nvidia lead tech sell-off

US stocks rolled over on Thursday as investors rotated out of tech after a key inflation report showed consumer prices unexpectedly fell on a month-over-month basis for the first time since 2020.

The S&P 500 (^GSPC) dropped 0.9% to fall back below 5,600 after crossing the level for the first time on Wednesday. The Dow Jones Industrial Average (^DJI) rose nearly 0.1%. The tech-heavy Nasdaq Composite (^IXIC) led the way down, sinking almost 2%.

Big Tech sold off hard with heavyweights like Nvidia (NVDA) down more than 5%, while the entire "Magnificent 7" group of stocks had its worst day in nearly a year. Tesla (TSLA) shares snapped an 11-day winning streak to drop more than 8% in its worst day since January after a Bloomberg report that the EV maker will delay the unveiling of its robotaxi.

Investors flocked to rate sensitive sectors like Real Estate (XLRE) and Utilities (XLU) following June's cooler than expected inflation print.

The Consumer Price Index (CPI) last month declined 0.1% over the previous month and increased just 3.0% over the prior year. The annual gain was the slowest rise in consumer prices since early 2021.

Stock gains had picked up pace this week as Fed Chair Jerome Powell suggested that conditions are almost right for the Federal Reserve to start making interest-rate cuts. Thursday's inflation look bolstered bets on a cut by September, with around 90% of traders expecting such an outcome, according to the CME FedWatch tool.

Another earnings season kicks off on Friday when JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) all report their second quarter results.

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S&P 500, Nasdaq fall from records as investors rotate out of Big Tech

Thu, July 11, 2024 at 4:03 p.m. EDT, Ines Ferré

The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) fell from record highs on Thursday as investors rotated out of Big Tech stocks following a cooler than expected monthly inflation print.

The tech-heavy Nasdaq slid almost 2% while the S&P 500 fell nearly 0.9% to drop below 5,600 after crossing that level for the first time in the prior session. The Dow Jones Industrial Average (^DJI) rose slightly.

Nvidia (NVDA) shares declined more than 5% while Alphabet (GOOGL), Amazon (AMZN) and Meta (META) all dropped too. Tesla (TSLA) declined more than 8% after Bloomberg reported the EV giant will delay its highly anticipated robotaxi reveal to October, from August 8.

Investors flocked to interest rate-sensitive stocks after the Consumer Price Index report showed inflation fell last month for the first time since May 2020, raising the prospects of Federal Reserve rate cuts this year.

Earnings season kicks off again Friday when JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) all report their second quarter results before the opening bell.

Inflation is cooling overall, but not for seniors

Thu, July 11, 2024 at 3:15 p.m. EDT, Ines Ferré

Inflation may be down for the first time in years, but try telling that to seniors and retirees.

Yahoo Finance's Kerry Hannon reports:

US consumer prices fell in June for the first time since the early months of the pandemic. Consumer prices dipped 0.1% on a monthly basis, bringing the annual rate of inflation to 3% from 3.3% in May, according to the Bureau of Labor Statistics’ latest Consumer Price Index report.

However, prices for items such as shelter, electricity, hospital and outpatient medical services — major expenses for millions of seniors — continue to outpace the overall rate of inflation.

“Prices are coming down, but the things that seniors are spending on are going up,” Mary Johnson, a Social Security and Medicare policy analyst, told Yahoo Finance. “This is clearly causing distress.”

Read more here.

Trending tickers on Thursday

Thu, July 11, 2024 at 2:30 p.m. EDT, Ines Ferré

Tesla (TSLA)

Tesla stock was on pace to snap its 11-day win streak after a Bloomberg report stated the EV maker plans to delay its highly anticipated robotaxi unveiling to October, from August.

Shares slipped more than 6% following the news report.

QuantumScape (QS)

QuantumScape shares soared more than 25% on Thursday after the San Jose, Calif.-based startup announced a production deal with Volkswagen (VOW3.DE, VOW.DE, VWAGY).

Under the agreement, the German carmaker will be allowed to mass-produce solid-state battery cells based on QuantumScape's technology.

Costco (COST)

Costco announced it will be hiking its membership fees for the first time since 2017. Shares slid more than 3%.

Wall Street analysts widely expected the big box retailer would raise the fees it charges members sometime this year. Costco shares hit all-time highs earlier this week. The stock is up roughly 30% year-to-date.

S&P 500, Nasdaq losses accelerate

Thu, July 11, 2024 at 2:04 p.m. EDT, Ines Ferré

The tech sell-off intensified on Thursday afternoon as investors rotated out of the hottest performers of the year.

Nvidia (NVDA) shares declined more than 5% while Alphabet (GOOGL), Amazon (AMZN), and Meta (META) all dropped at least 3%.

The Nasdaq Composite (^IXIC) slid to a session low, down more than 2%, while the S&P 500 (^GSPC) fell 1% after crossing 5,600 for the first time in the prior session.

Interest rate-sensitive stocks rose after the Consumer Price Index report showed inflation fell last month for the first time since May 2020, raising the probability of rate cuts from the Federal Reserve later this year.

The Real Estate Sector Select ETF (XLRE) rose more than 2.5%, while Utilities (XLU) increased more than 1.5%.

Big Tech was selling off on Thursday following a cooler-than-expected inflation print.

The PC industry is finally on the path to recovery

Thu, July 11, 2024 at 1:15 p.m. EDT, Ines Ferré

Yahoo Finance's Dan Howley reports:

The turnaround in the global PC market continues to gain speed as hype around AI PCs grows and enterprise customers start to pick up purchases of laptops and desktops. According to early data from market research firm IDC, the PC market grew 3%, marking the second quarter of growth after a staggering seven consecutive quarters of declines.

While that’s higher than the 1.9% growth rival firm Gartner says the market saw in the quarter, both numbers point to a recovery in a sector that was crushed after it saw sales pulled forward at the start of the pandemic, which suppressed sales in subsequent quarters.

"Make no mistake, the PC market, just like other technology markets, faces challenges in the near term due to maturity and headwinds," said IDC group vice president Ryan Reith.

Read more here.

Cooler inflation reading helps the case for a Fed rate cut in September

Thu, July 11, 2024 at 12:35 p.m. EDT, Ines Ferré

Yahoo Finance's Jennifer Schonberger reports:

The latest sign that inflation is cooling makes it more likely the Federal Reserve will be able to gain enough confidence to cut interest rates this fall.

The odds of a cut in September jumped Thursday after the release of favorable new numbers from the Consumer Price Index (CPI), with traders now pricing in an 83% probability of an easing at the Fed's meeting on Sept. 17-18.

"I think it puts September firmly on pace for a cut," Peter Tchir, Academy Securities macro strategy head, told Yahoo Finance.

Some Fed watchers even think that a cut at the Fed's July 30-31 meeting is now a possibility if some other pieces fall into place.

"The Fed could very well lower rates sooner than September if the labor market softens at a faster clip," said Quincy Krosby, chief global strategist for LPL Financial.

Read more here.

Tesla falls to session lows after report of robotaxi unveiling delay

Thu, July 11, 2024 at 11:50 a.m. EDT, Ines Ferré

Tesla (TSLA) shares fell to session lows after a Bloomberg report stated the EV giant plans to delay its highly anticipated robotaxi unveiling to October, from August.

According to the report citing people familiar with the decision, the delay will allow for more time to build additional prototypes.

Tesla shares fell as much as 6.5% immediately following the headline.

Shares of the EV maker have been on a tear recently, rising during the past 11 sessions.

Tesla shares turn negative

Thu, July 11, 2024 at 11:40 a.m. EDT, Ines Ferré

Tesla (TSLA) shares turned negative on Thursday after a Bloomberg report said the EV giant will delay until October its robotaxi unveiling, originally slated for August 8.

The stock's recent monstrous 11-day rally has left short sellers sitting on heavy losses. Earlier on Thursday, TSLA shorts were down about $7 billion in July month to date, mark-to-market, according to S3 Partners data.

"TSLA shorts have been getting squeezed since May and especially since the rally that started at the end of June," Ihor Dusaniwsky, managing director at S3 Partners, told Yahoo Finance on Thursday.

Shares turned negative at around 11:30 a.m ET, falling as much as 3.5%.

Airline stocks hammered after Delta disappoints on earnings guidance

Thu, July 11, 2024 at 11:15 a.m. EDT, Ines Ferré

Airline stocks sold off on Thursday after Delta Air Lines (DAL) forecast third quarter earnings below Wall Street expectations, as carriers have been forced to cut their domestic summer fares.

Travel demand has spiked going into the summer season, but that hasn't necessarily translated into more profits, particularly as ticket prices have fallen.

Delta said its adjusted earnings will be in the range of $1.70 to $2 a share for the third quarter, compared to a consensus analyst estimate of $2.04, according to Bloomberg data.

Delta peers United Airlines (UAL) and American (AAL) both fell more than 4% on Thursday.

Nvidia drops 3% amid tech sell-off, Nasdaq falls

Thu, July 11, 2024 at 10:26 a.m. EDT, Ines Ferré

Nvidia (NVDA) shares fell as much as 3% during on Thursday as investors sold off tech stocks following a cooler-than-expected inflation print.

The Nasdaq Composite (^IXIC) erased earlier morning gains to fall as much as 0.8%. The S&P 500 (^GSPC) also fell 0.3% after crossing 5,600 for the first time in the prior session.

Tech heavyweights Meta (META), Apple (AAPL), Microsoft (MSFT), and Alphabet (GOOGL) all fell more than 1%.

Interest rate-sensitive stocks rose after the Consumer Price Index report showed inflation fell last month for the first time since May 2020, raising the probability of rate cuts from the Federal Reserve later this year.

The Real Estate Sector Select ETF (XLRE) rose more than 2%, while Utilities (XLU) rose more than 1.5%.

New inflation data adds to case for Fed rate cuts

Thu, July 11, 2024 at 10:00 a.m. EDT, Alexandra Canal

Inflation has remained stubbornly above the Federal Reserve's 2% target on an annual basis. But recent economic data has helped fuel a narrative that the central bank should cut rates sooner than later.

Immediately following Thursday's encouraging inflation data, which showed headline inflation falling month over month for the first time since May 2020, markets were pricing in a roughly 89% chance the Federal Reserve begins to cut rates at its September meeting, up from 75% a day prior, according to data from the CME Group.

The data is the latest to build the case for Fed rate cuts.

On Friday, the Bureau of Labor Statistics showed the labor market added 206,000 nonfarm payroll jobs last month, ahead of the 190,000-plus expected by economists. However, the unemployment rate unexpectedly rose to 4.1%, up from 4% in the month prior. It was the highest reading in almost three years.

Notably, the Fed's preferred inflation gauge, the so-called core PCE price index, showed inflation eased in May. The year-over-year change in core PCE came in at 2.6% over the prior year in May, in line with estimates and the slowest annual gain in more than three years.

"The decline in the consumer price index between May and June won’t stick but it strengthens the case for the Federal Reserve to begin cutting interest rates in September, particularly as the labor market has softened," wrote Oxford Economics chief US economist Ryan Sweet.

Still, the economist warned, "We caution about reading too much into the decline in the CPI in June and don’t believe that this is the new trend."

Seema Shah, chief global strategist at Principal Asset Management, agreed the latest numbers "put us firmly on the path for a September Fed rate cut" but said that "a July policy cut is still off the table."

"Not only would it spark questions of 'what do they know about the economy that we don't know?' but the Fed still needs to gather additional evidence of waning price pressures to be absolutely certain of the inflation path."

Read more on the latest CPI print here.

Stocks hold steady after inflation cools in June

Thu, July 11, 2024 at 9:37 a.m. EDT, Ines Ferré

Stocks held steady at the open on Thursday after the slowest annual rise in consumer inflation since early 2021.

The S&P 500 (^GSPC) rose to just above the flatline, having crossed 5,600 for the first time on Wednesday. The Dow Jones Industrial Average (^DJI) fell slightly, while the tech-heavy Nasdaq Composite (^IXIC) gained 0.1%.

Falling gas prices helped the Consumer Price Index (CPI) in June decline 0.1% compared with the level in May, when the rate was unchanged.

Cooling inflation bolsters market expectations that the Federal Reserve will meet its 2% inflation target and start cutting rates this year.

Inflation falls in June for first time since 2020

Thu, July 11, 2024 at 8:44 a.m. EDT, Myles Udland

Two years ago, the June CPI report brought investors the news that inflation was rising at the fastest pace in 40 years.

Today, investors learned inflation fell last month for the first time since May 2020 as the prospect of (multiple) rate cuts from the Federal Reserve later this year grows more likely by the day.

The headline Consumer Price Index (CPI) in June fell 0.1% from the prior month after prices were unchanged in May. On a "core" basis, which excludes food and energy, CPI rose 0.1%. Economists had expected prices to rise 0.1% and 0.2%, respectively, last month.

On an annual basis, prices rose 3% in June and 3.3% on a core basis.

The jump in core CPI over the prior year was the smallest since April 2021.

Delta joins PepsiCo in calling out consumer weakness

Thu, July 11, 2024 at 7:00 a.m. EDT, Brian Sozzi

OK, OK, I get it — we are only two earnings reports into earnings season with results from PepsiCo (PEP) and Delta (DAL) out this morning.

But, I am instantly concerned about the state of the consumer and how that may impact the vibe around earnings reports in coming weeks (which will arrive against the backdrop of a record-setting market).

Here's what Delta CEO Ed Bastian told Yahoo Finance's Brad Smith about the consumer:

"Our second quarter was really strong. As we look into the third quarter we see another strong quarter. The domestic marketplace is where a little bit of the price sensitivity is starting to take hold, and it’s in the lower fare buckets."

And here's what PepsiCo CEO Ramon Laguarta said on the consumer on his earnings release:

“During the second quarter, our business delivered net revenue growth, strong gross and operating margin expansion and double-digit EPS growth, remaining agile despite facing difficult net revenue growth comparisons versus the prior year, subdued category performance within North America convenient foods and the impacts associated with certain product recalls at Quaker Foods North America."

Quick take on PepsiCo's earnings

Thu, July 11, 2024 at 6:47 a.m. EDT, Brian Sozzi

Eight straight quarters of global volume declines for PepsiCo (PEP) isn't going to sit well in the stomachs of investors this morning.

Seeing the stock sell off by 2% in the premarket, which looks deserved after a first pass of the results.

I am catching up with PepsiCo CEO Ramon Laguarta around 9:30 a.m. ET today by phone. Will then be hopping on Yahoo Finance around 9:50 a.m. ET, so flip us on for the latest analysis!

Costco's stock before and after a membership fee hike

Thu, July 11, 2024 at 5:16 a.m. EDT, Brian Sozzi

Costco (COST) finally pulled the trigger last night on a much-discussed membership fee increase.

The entry-level fee will go up to $65 from $60, and the upper-tier membership will go up $10 to $130.

Here's the vibe around Costco's stock before and after a fee hike, compliments of Stifel analyst Mark Astrachan:

"COST shares have outperformed the S&P 500 in the 3, 6, 9, and 12-months leading to a membership fee increase announcement in each of the last three cycles since 2006, with price increases in 2006, 2011, and 2017. For example, COST shares averaged 11.3% outperformance relative to the S&P 500 in the 12-months ahead of the MFI announcement in the three price increases beginning in 2006. Average outperformance has been most notable in the six and nine months ahead of a MFI, up 13.6% and 14.3%, respectively. Conversely, COST shares have consistently underperformed the S&P 500 over the same periods post MFI announcement."

Costco shares are up 34% year to date.