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Time of India

US stock market tumbles as PPI inflation hits 3-year high, crushing Dow, S&P, Nasdaq and Fed rate cut hopes

US stock market opened Thursday under pressure as hotter-than-expected wholesale inflation rattled investors, sending the Dow Jones Industrial Average, S&P 500, and Nasdaq lower. July's Producer Price Index (PPI) jumped 0.9% month-over-month, far above forecasts, signaling persistent price pressures. AI stock Coherent (COHR) plunged nearly 19% after disappointing second-quarter results, highlighting caution in growth-focused sectors. Amazon, Netflix, and UnitedHealth posted modest gains, while Nvidia and other tech giants slipped. Treasury yields remained steady, and oil prices edged slightly higher. Strong labor data with falling jobless claims added nuance, leaving investors navigating a mix of inflation worries, earnings volatility, and selective stock gains. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 3BHK Transformation Possible for ₹4.5 Lakh? HomeLane Get Quote Undo Dow and S&P 500 retreat as inflation worries weigh The Dow Jones Industrial Average fell 0.4% in early trading, mirroring the S&P 500, which also declined 0.4%. The Nasdaq composite, heavy on technology, followed suit with a 0.4% drop. ALSO READ: PPI inflation shock rocks Wall Street and Trump — big Fed rate cut dreams go up in smoke Live Events The retreat came after the Labor Department reported the U.S. Producer Price Index (PPI) for July, revealing wholesale inflation rose 0.9% month-over-month, well above economists' expectations of 0.2%. Annually, the PPI surged 3.3% versus the forecasted 2.6%. Core PPI, which strips out food and energy, also jumped 0.9% month-over-month and 3.7% year-over-year, signaling persistent underlying inflation pressures. 'This PPI report suggests inflation is still running hotter than the Fed might like,' said Scott Lehtonen, market analyst at Investor's Business Daily. 'Investors are recalibrating expectations for future interest rate moves, even as the job market shows resilience.' Treasury yields and oil markets Bond markets reacted modestly to the PPI data. The 10-year Treasury yield held steady at 4.23%, suggesting investors are balancing inflation fears against ongoing economic strength. Oil prices, meanwhile, eked out a modest gain, with West Texas Intermediate futures trading just below $63 a barrel after two consecutive days of losses. Rising energy costs are contributing to broader inflation concerns, adding another layer of complexity for markets. Nasdaq-100 movers: Amazon and Netflix gain while Strategy and AppLovin slide On the Nasdaq-100, select tech giants bucked the broader market's downward trend. Amazon (AMZN) shares jumped 2% following strong momentum from recent gains, while Netflix (NFLX) rose 0.7%. Conversely, Strategy (MSTR), a Bitcoin-linked investment vehicle, dropped nearly 3%, and mobile advertising company AppLovin (APP) lost 2.8%. The mixed performance underscores how investors are rotating out of speculative and high-volatility names in the face of fresh inflation data. Dow movers: Amazon, Nvidia, and UnitedHealth lead early gains and losses Within the Dow Jones Industrial Average, Amazon, Nvidia (NVDA), and UnitedHealth Group (UNH) were notable early movers. Amazon (AMZN) gained 0.5%, extending its two-day rally. UnitedHealth (UNH) climbed 0.9%, eyeing a fifth consecutive session of gains. Nvidia (NVDA) slipped 0.6%, retreating slightly from this week's record highs as investors weigh valuation risks amid rising inflation. These moves illustrate the delicate balancing act between growth prospects and macroeconomic realities, especially as tech stocks remain sensitive to interest rate expectations. Coherent plunges on disappointing earnings Artificial intelligence company Coherent (COHR) emerged as one of the day's biggest losers. Shares collapsed 19% following the release of second-quarter earnings that fell short of analyst forecasts. While Coherent's revenues beat some internal targets, the company cited slowing demand in key segments and higher operational costs, sending a negative signal to AI investors. Analysts caution that this could signal a broader cooling in the AI hardware sector after months of rapid growth. Other notable earnings movers Several other companies reported earnings Thursday with mixed results: Advance Auto Parts (AAP) down 1.7% Birkenstock (BIRK) down 2% Cisco Systems (CSCO) down 1.4% Deere (DE) down 5% (JD) up modestly NetEase (NTES) down nearly 7% Tapestry (TPR) down 11% The losses reflect a cautious investor mood, especially toward discretionary and industrial sectors, as inflation data prompts fears of margin pressure and tighter consumer spending. Jobless claims fall, adding nuance to the economic picture Despite rising wholesale prices, the labor market showed unexpected resilience. Initial jobless claims fell to 224,000, below last week's 226,000 and well below economists' projection of 230,000. 'This is a clear signal that the U.S. job market remains tight,' Lehtonen added. 'Strong labor data combined with rising prices could complicate the Fed's decision-making, keeping investors alert to any signs of policy shifts.' Implications for investors Thursday's market action highlights several key takeaways: Inflation remains a market driver – Hot PPI readings are fueling concerns that the Federal Reserve may maintain tighter monetary conditions longer than expected. Growth stocks remain volatile – Companies like Coherent and other tech-linked stocks are highly sensitive to earnings misses amid broader economic uncertainty. Rotation into quality – Defensive sectors and dividend-paying stocks, including UnitedHealth, are attracting investors seeking stability. Macro context matters – Energy prices, bond yields, and job market trends are all feeding into a complex market narrative. For traders and long-term investors alike, these signals suggest a need for careful portfolio management, selective stock picking, and ongoing monitoring of inflation trends. Market snapshot as of Thursday morning Index / ETF Change Dow Jones Industrial Average –0.4% S&P 500 –0.4% Nasdaq Composite –0.4% Invesco QQQ Trust (QQQ) –0.4% SPDR S&P 500 ETF (SPY) –0.3% 10-year Treasury yield 4.23% WTI Oil ~$63 / barrel Hot inflation readings, mixed earnings, and resilient job data set a cautious tone for Wall Street. Investors are navigating a tricky environment where growth and value stocks respond differently to macroeconomic pressures. AI-focused companies, in particular, may face continued volatility as market expectations evolve. FAQs: Q1: Why did US stock market fall today? A1: US stock market fell as July PPI inflation came in much higher than expected. Q2: What caused Coherent stock plunge today? A2: Coherent stock plunge happened after weaker-than-expected Q2 earnings and slowing demand signals.