Markets
Stocks fell last week as the chip-stock trade entered a selloff phase, despite upbeat news on inflation.
The Standard & Poor’s 500 Index fell 1.55 percent, while the Nasdaq Composite Index declined 2.90 percent. The Dow Jones Industrial Average slipped 0.93 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, lost 0.80 percent.¹˒²
Chip Stocks Under Pressure
Renewed tensions in the Middle East gripped investors as the week kicked off. Stocks slid broadly as oil prices climbed.³
On Tuesday, investors cheered news of the first monthly decline in consumer inflation in six years. The following day, an unexpected drop in wholesale inflation prompted investors to rethink the Fed’s next move on short-term interest rates.⁴˒⁵
But on Thursday, the S&P 500 opened lower as chip stocks once again dragged the broader market lower.⁶
As the week wrapped up, the S&P lost more than 1 percent on Friday, while the Nasdaq fell 1.4 percent as investors appeared to rotate out of chip stocks and other technology names in favor of other sectors.⁷
Inflation Declines
The Consumer Price Index (CPI) surprised Wall Street last week, falling 0.4 percent in June from the prior month. While month-over-month inflation has decelerated at times over the past six years, this was the first monthly decline in consumer prices since April 2020.⁸
Wednesday’s Producer Price Index report showed that monthly wholesale inflation unexpectedly declined 0.3 percent in June. Later that day, New York Fed President John Williams said he believed inflation had likely peaked.
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