Global Markets Decline Amid Tech Sell-Off and Economic Data Supports Dollar
Key Points:
- Stocks fall led by Dow
- Euro eases after ECB says September rate move is uncertain
- Dollar gains after strong U.S. manufacturing and jobs data
World stock indexes declined on Thursday as high-priced technology stocks saw a sell-off that extended to the broader market. The dollar index strengthened following robust U.S. economic data, while Japan’s yen weakened after recent highs and the euro eased following comments from ECB President Christine Lagarde.
ECB Holds Interest Rates
The Dow Jones Industrial Average fell by 533.06 points (1.29%) to 40,665.02, halting a streak of consecutive closing highs. The S&P 500 dropped 43.68 points (0.78%) to 5,544.59. While most S&P 500 indexes were down, the energy sector bucked the trend with a 0.3% gain. The Nasdaq Composite lost 125.70 points (0.70%) to 17,871.22, giving back early gains. Europe’s STOXX 600 index saw a minor drop of 0.16%, and MSCI’s gauge of global stocks fell by 0.81%.
Gene Goldman, chief investment officer at Cetera Investment Management, noted that the sell-off in technology stocks is spreading, suggesting investor concerns. Investors had largely priced in good news, expecting the Federal Reserve might cut interest rates in September and avoid a recession. Anticipation of comments from Donald Trump at the Republican National Convention added to market nervousness, with potential for new tariffs being a specific concern for technology firms.
Dollar Strengthens with Economic Data
In the foreign exchange market, the dollar index climbed after favorable U.S. manufacturing data and jobless numbers, signaling no significant slowdown in the labor market. The dollar index gained 0.5% to 104.19, as the euro slipped 0.37% to 1.0896. U.S. initial unemployment claims increased by 20,000 to 243,000 for the week ending July 13, slightly above expectations but not enough to indicate significant labor market changes.
A part of the Treasury yield curve steepened as rising unemployment claims bolstered views that the Fed might cut interest rates in September. Two-year yields rose 3.4 basis points to 4.463, and ten-year yields increased by 4.4 basis points to 4.19.
Market Anticipates Fed Rate Cut
JoAnne Bianco, an investment strategist at BondBloxx, remarked that markets see a high likelihood of a Fed rate cut in September, provided inflation trends favorably. Meanwhile, the yen weakened against the dollar, influenced by the significant interest rate differential between the U.S. and Japan.
Gold and Oil Movements
Gold remained near record levels but slightly eased to $2,441.61 per ounce. Oil prices rose throughout the day but steadied later, with Brent crude futures up by 3 cents to $85.11 per barrel, while U.S. crude slipped by 3 cents to $82.82 per barrel.
Source: Stocks ease as tech sell-off spreads, data boosts dollar.
