The Nasdaq index fell sharply on Thursday, mainly due to declines in Nvidia, Apple, and Tesla stocks. Investors turned to smaller companies following the release of lower-than-expected inflation data, with widespread expectations that the Federal Reserve will cut interest rates in September.
The S&P 500 index also declined, as a report from the U.S. Department of Labor showed an unexpected drop in U.S. consumer prices in June, marking the lowest annual growth rate in the past year, bringing the Fed closer to a rate cut in September. The Dow Jones index, however, saw a slight increase.
According to CME Group's FedWatch, rate futures data shows that traders believe there is more than a 90% chance that the Fed will cut rates at the September meeting, up from about 74% on Wednesday.
Despite signs of easing inflation, stocks of Wall Street's most valuable companies still fell, with Microsoft and Amazon each dropping more than 2%, and Meta Platforms falling by about 4%.
Tesla dropped by 8.4%, marking its biggest one-day decline since January. According to Bloomberg News, the company has delayed the launch of its robotaxi by about two months to October.
Apple fell by 2.3% after hitting a record high on Wednesday. BofA Global Markets raised its price target for Apple, citing expectations that new AI features will drive strong iPhone sales.
While tech stocks plunged on Thursday, shares of smaller companies performed strongly. The small-cap Russell 2000 index rose by 3.6%, reaching its highest closing level since March 2022, as investors bet that rate cuts will improve the business conditions for smaller companies.
