Stock Market Indexes Tumble Nearly 2% After Another Hot Inflation Report; Bank Earnings Disappoint

The stock market fell nearly 2% after another hot reading on inflation. Indexes traded at session lows around 10 a.m. ET.

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The Nasdaq composite and S&P 500 sold off almost 2%, while the Dow Jones Industrial Average fell 1.9%. The small-cap Russell 2000 lost 1.8%.

Volume fell on the NYSE and Nasdaq compared with the same time on Wednesday.

European stocks also sold off, with the German DAX down 1.9%, the Paris CAC 40 off 1.6% and the London FTSE 100 also down 1.6% in afternoon trading.

Producer Prices Jump More Than 11%

The producer price index jumped 11.3% in June from the same period a year ago. That’s above estimates of 10.4% although a slight decline from the previous month’s 10.8% increase. Wholesale prices climbed 1.1%, also above expectations.

“It’s clear that food and energy are driving PPI higher, as was the case in yesterday’s inflation print. When removing these volatile components, PPI appears to have peaked and is starting to roll over, a telltale sign that the economy is shifting into late-cycle territory,” Peter Essele, head of portfolio management at Commonwealth Financial Network, said in a commentary.

The odds for a 100-basis point interest rate hike at this month’s Fed meeting shot up to more than 85% after Wednesday’s consumer price index report, according to Cboe’s FedWatch.

The number of jobless claims rose to 244,000 from 235,000 the previous week. Economists had expected 234,000.

Treasury yields climbed after the economic data, with the 10-year note’s yield up 10 basis point to 3.0%.

Bank Stocks Fall On Earnings

Bank stocks were lower as the SPDR S&P Bank ETF (KBE) slid 2%.

JPMorgan (JPM) fell to the lowest since November 2020 after results missed expectations. The bank also plans to suspend its stock buyback program. Shares fell 4.5% in heavy volume in early trading.

Morgan Stanley (MS) also missed views. Earnings slid 25% to $1.39 per share. Revenue fell 11% to $13.1 billion. The bank’s stock fell nearly 3%, also in busy trading.

In the technology sector, Taiwan Semiconductor Manufacturing (TSM) edged lower after the chipmaker beat second-quarter estimates and gave a better-than-expected forecast for the current quarter. The stock is trying to rebound from a prolonged decline since a January peak.

Novavax, Conagra, Cigna Among Stock Market Movers

Novavax (NVAX) won Food and Drug Administration approval for its Covid vaccine after a long delay. Yet, the stock fell 10%. Novavax shares have been rebounding from a decline of more than 80% from its December peak.

Conagra (CAG) slid more than 7% after the maker of food products missed sales expectations for the May-ended quarter. Profit came in above views, however. Thursday’s drop is a setback for the stock, which has been forming the right side of a cup base with a 37.07 buy point.

Innovator IBD 50 ETF (FFTY) fell 0.8%.

Cigna (CI) led declines in the IBD 50 as the managed care provider slid 3.5% in big volume. Shares fell as much as 4.6% below its 273.67 buy point. Jeffries downgraded the stock from buy to hold and cut the price target from 330 to 271.

Murphy USA (MUSA) fell nearly 2% and is back below the 262.638 buy point of Monday’s breakout. But so far there’s no sell signal. McKesson (MCK) fell below its 50-day moving average with a 2.7% decline in heavy trading. It is still forming a flat base.

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