‘Magnificent 7’ power stock surge after CPI-fueled sell-off
US stocks rose on Thursday as Big Tech stocks led a rebound from a sell-off fueled by Wednesday’s surprise uptick in consumer prices.
The tech-heavy Nasdaq Composite (^IXIC) led the way, gaining roughly 1.7%. The S&P 500 (^GSPC) rose about 0.7%, while the Dow Jones Industrial Average (^DJI) had a more modest day, closing just slightly below the flatline.
Meanwhile, the 10-year Treasury yield (^TNX) traded around 4.56%, steadying after surging to touch its highest level since November on Wednesday.
Members of the “Magnificent 7” tech stocks helped lead the rally: Apple (AAPL) and Nvidia (NVDA) were both up more than 4%, while Amazon (AMZN) gained more than 1.5% to hit its first record high since 2021.
The inflation front produced a slightly better picture for investors on Thursday: Producer Price Index in March rose 0.2% from the previous month, a lower rate of growth than economists had forecast. Year-over-year growth of 2.1% was also below estimates. However, that annual growth represented the fastest jump in producer prices in nearly a year.
Stocks pulled back and bond yields soared after a hotter-than-expected March CPI report prompted investors to reassess expectations for Federal Reserve policy. The market is now pricing in just two rate cuts in 2024, to come later in the year than foreseen.
Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards.
Against that backdrop, hopes are that first-quarter corporate results can provide momentum to stocks, given limited signs that high borrowing costs are slowing earnings. As reports trickle in, investors are bracing for quarterly updates from some of America’s biggest banks, including JPMorgan (JPM), to usher in the season in earnest on Friday.
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