Stocks of Tech Giants Drop on Wall Street
Big tech companies are seeing a decrease in their stock prices on Wall Street after inflation data came in weaker than expected by analysts. This has led to a decline in the stocks of the so-called “Big Seven” companies – Microsoft, Apple, Nvidia, Alphabet-Google, Amazon.com, Meta Platforms, with drops ranging from 2.6% to 5.3%.
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Not only are the stocks of these tech companies falling, but Nasdaq .IXIC and FANG+ stocks are also dropping by up to 2.5%, hitting weekly lows. S&P 500 tech is also down by over 2%.
Consumer prices in the United States unexpectedly dropped in June, according to data released on Thursday by the Department of Labor, which should fuel expectations.
Federal Reserve Considers Interest Rate Cut
According to Reuters, the Federal Reserve is considering a future reduction in interest rates. In June, the Consumer Price Index (CPI) decreased by 0.1% on a monthly basis, after remaining stable in May.
Analysts Predicted a Different Outcome
Economists interviewed by Reuters had expected a 0.1% increase in the CPI. Over the course of a year, the CPI increased by 3.0%, down from 3.3% in May, when economists had predicted a 3.1% increase.
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Core Inflation Rate Remains Steady
Excluding volatile elements such as food and energy, the core CPI increased by 0.1% in June, compared to 0.2% in May and against a consensus of 0.2%. On an annual basis, the core inflation rate remained in line with expectations.
The impact of inflation on bond yields
The basic consumer price index increased by 3.3% in the latest report, following a 3.4% increase in the previous month. After the release of these data, yields on US sovereign bonds experienced a significant drop.
At 12:35 GMT, the yield on the ten-year treasury bonds decreased by 8.9 basis points to 4.1907%, while the yield on the two-year bonds dropped by 12 basis points to 4.513%. Market analysts now believe that a rate cut by the Fed in September is highly likely, with a probability of 94%. At the beginning of the week, investors were only giving this rate cut a 70% chance.
Persistent inflation had forced the Fed to delay rate cuts, but signs indicating a normalization of price dynamics are now encouraging investors.
