US close: Stocks end mixed despite inflation slowdown, Daly comments

US stocks finished mixed on Thursday, with the Dow edging higher but the S&P 500 and Nasdaq sinking sharply back from record highs, despite rising hopes that the Federal Reserve may cut interest rates sooner than anticipated.

“Investors seem to have been on the rate cut rollercoaster for an unhealthy amount of time. [...] But the latest set of US inflation figures suggest the first rate cut in the US could finally be nigh” said AJ Bell head of financial analysis Danni Hewson.

The Dow gained 0.08% to 39,753.75, while the S&P 500 fell 0.88% to 5,584.54 and the Nasdaq plunged 1.95% to 18,283.41.

Market bets for a rate cut at the Fed's September meeting rose after the annual inflation rate fell more than forecast to its joint lowest level in more than three years in June.

“Expectation of a September cut by the Fed jumped after the cooler than anticipated CPI reading, with traders pricing in a 90% chance of a cut," Hewson said.

Adding to speculation were comments from San Francisco Fed president Mary Daly who said that Thursday's data supports the call for easing monetary policy – though she refrained from giving a prediction of when the first cut would come.

“With the information we have received today, which includes data on employment, inflation, GDP growth and the outlook for the economy, I see it as likely that some policy adjustments will be warranted," she said.

All eyes on the data

The annual rise in the consumer price index slowed to 3.0% last month, down from 3.3% in May and below the consensus forecast of 3.1%. This was the lowest level since June 2023, matching a reading not seen since March 2021, while the monthly change in prices turned negative (-0.1%) for the first time since May 2020.

Meanwhile, core annual inflation, which strips out volatile items like food and energy, unexpectedly eased to 3.3% from 3.4%, surprising economists who had projected no change. This was also the lowest level since April 2021.

Brooks said the data "has given the green light to traders to fully price in a rate cut from the Fed in September", with investors now pricing in a 80%-plus chance of a rate cut at that meeting. "The market is also pricing in more than two rate cuts this year, not long ago only one rate cut was priced in," she said.

Meanwhile, initial filings for unemployment benefits totalled 222,000 in the week ended 5 July. That's down from a revised 239,000 the week before and well below the dip to 236,000 expected by economists. The four-week moving average, which smoothes out week-to-week volatility, fell to 233,500 from a revised 238,750 the week before.

Market movers

Shares in Costco fell 4% on the back of the wholesale retailer's announcement of its first price increase in seven years. The company said it was hiking its annual membership price by $5.

Apple slipped 2% after the European Commission approved plans to open up its contactless payments system to rivals, drawing a line under a long-running antitrust probe. Regulators ruled in 2022 that Apple was breaking competition laws by blocking rivals’ access to favour its own payment system. In response, Apple offered various concessions, which officials have spent the last six months testing.

Delta Air Lines dropped 4% after reporting a 30% fall in second-quarter net income and disappointing the market with its sales guidance for the current quarter.

Electric carmaker Tesla tanked 8% on the back of reports that the company is delaying the launch of its Robotaxi by two months.

Dow Jones - Risers

Home Depot Inc. (HD) $353.79 2.79%
McDonald's Corp. (MCD) $254.80 1.72%
3M Co. (MMM) $103.23 1.53%
Walgreens Boots Alliance, Inc. (WBA) $11.43 1.51%
Dow Chemical Co. (DOW) $52.48 1.35%
Merck & Co. Inc. (MRK) $128.97 1.31%
Nike Inc. (NKE) $73.39 1.17%
Amgen Inc. (AMGN) $325.09 1.06%
Cisco Systems Inc. (CSCO) $46.76 1.06%
Travelers Company Inc. (TRV) $208.95 0.85%

Dow Jones - Fallers

Intel Corp. (INTC) $33.50 -3.93%
Microsoft Corp. (MSFT) $454.70 -2.48%
Apple Inc. (AAPL) $227.57 -2.32%
Walmart Inc. (WMT) $69.80 -0.87%
Procter & Gamble Co. (PG) $165.54 -0.76%
Salesforce.Com Inc. (CRM) $251.12 -0.58%
Walt Disney Co. (DIS) $96.60 -0.38%
Visa Inc. (V) $262.55 -0.17%
JP Morgan Chase & Co. (JPM) $207.45 -0.17%
American Express Co. (AXP) $238.91 -0.08%

S&P 500 - Risers

CenturyLink Inc. (LUMN) $1.16 10.48%
Hanesbrands Inc. (HBI) $5.13 8.23%
Leggett & Platt Inc. (LEG) $12.14 7.91%
Vornado Realty Trust (VNO) $28.74 7.64%
Sba Communications Corp. (SBAC) $209.86 7.52%
Foot Locker Inc. (FL) $25.18 7.43%
Mohawk Inds Inc. (MHK) $121.30 7.40%
D. R. Horton Inc. (DHI) $149.83 7.26%
Gap Inc. (GPS) $24.33 7.23%
Lennar Corp. Class A (LEN) $155.83 6.94%

S&P 500 - Fallers

Lam Research Corp. (LRCX) $1,059.94 -5.98%
Nvidia Corp. (NVDA) $127.40 -5.57%
Applied Materials Inc. (AMAT) $241.26 -5.38%
Micron Technology Inc. (MU) $130.23 -4.52%
KLA-Tencor Corp. (KLAC) $852.95 -4.42%
QUALCOMM Inc. (QCOM) $199.85 -4.29%
Costco Wholesale Corp. (COST) $846.59 -4.27%
Meta Platforms Inc. (META) $512.70 -4.11%
Microchip Technology Inc. (MCHP) $92.09 -4.05%
Delta Airlines Inc. (DAL) $44.99 -3.99%

Nasdaq 100 - Risers

Qurate Retail Inc. (QRTEA) $0.75 7.35%
JD.com, Inc. (JD) $28.63 6.99%
DENTSPLY Sirona Inc. (XRAY) $25.71 5.33%
Illumina Inc. (ILMN) $118.00 4.27%
Dollar Tree Inc (DLTR) $106.73 4.15%
Charter Communications Inc. (CHTR) $304.14 3.47%
Cognizant Technology Solutions Corp. (CTSH) $70.14 3.41%
Align Technology Inc. (ALGN) $256.30 2.88%
Sirius XM Holdings Inc (SIRI) $3.61 2.85%
Baidu Inc. (BIDU) $100.67 2.79%

Nasdaq 100 - Fallers

Tesla Inc (TSLA) $241.03 -8.44%
Lam Research Corp. (LRCX) $1,059.94 -5.98%
Nvidia Corp. (NVDA) $127.40 -5.57%
Applied Materials Inc. (AMAT) $241.26 -5.38%
Micron Technology Inc. (MU) $130.23 -4.52%
KLA-Tencor Corp. (KLAC) $852.95 -4.42%
QUALCOMM Inc. (QCOM) $199.85 -4.29%
Costco Wholesale Corp. (COST) $846.59 -4.27%
Meta Platforms Inc. (META) $512.70 -4.11%
Microchip Technology Inc. (MCHP) $92.09 -4.05%