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Market Selloff Driven by Tech Slide and Fed Uncertainty Ahead of CPI Report
All three major U.S. stock indexes dropped more than 1% on Thursday, led by significant declines in technology and financial shares. Investor sentiment, already shaken by recent selloffs in sectors like software, turned more cautious ahead of Friday’s pivotal Consumer Price Index (CPI) report. This key inflation data is seen as critical for gauging the Federal Reserve’s next policy move. The market’s retreat was amplified by a reassessment of rate cut expectations, which were eroded following Wednesday’s unexpectedly strong U.S. jobs report. Initial jobless claims data on Thursday, which fell less than anticipated, offered little relief to the bearish tone. The day’s action highlights how sensitive equity valuations are to shifting narratives around the Fed’s policy path.
The shifting outlook was reflected in the bond market, where Treasury yields declined as prices rose. The yield on the benchmark 10-year note fell nearly 6 basis points to 4.125%, continuing a recent downtrend. This move suggests a flight to safety and a recalibration of growth and inflation expectations. “The bull case on the Fed cutting was pretty much centered around a weak employment picture, so that case was challenged,” noted Jay Hatfield of Infrastructure Capital Advisors. The Dow Jones Industrial Average lost 516 points (1.03%), the S&P 500 fell 78.52 points (1.13%), and the tech-heavy Nasdaq Composite suffered the steepest decline, dropping 371.24 points, or 1.61%.
Short Summary
U.S. stocks sold off sharply as declining technology shares and revised Federal Reserve rate cut expectations weighed on markets ahead of critical inflation data. The 10-year Treasury yield fell alongside major indexes, with the Nasdaq dropping over 1.6%. All eyes are now on the upcoming CPI report to determine the future trajectory of monetary policy and market direction.
