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Key Takeaways
- The S&P 500 fell 0.9% on Thursday, July 11, 2024, retreating from its record high as tech stocks came under pressure following the latest inflation data.
- Shares of big tech companies sold off, with significant losses in the semiconductor industry, suggesting a rotation out stocks that have soared in 2024.
- Shares of home builders and construction suppliers gained as cooler inflation increased optimism that mortgage rates could head lower.
After a midsummer streak of record closing highs that lasted for more than a week, the S&P 500 and Nasdaq Composite retreated on Thursday, pressured by underperformance from the tech sector.
The S&P 500 lost 0.9% on the day, while the tech-heavy Nasdaq dropped 2%. The Dow eked out a minimal gain, rising less than 0.1%.
The record-setting rally sputtered as the latest Consumer Price Index ( CPI ) data showed an unanticipated month-over-month decline in prices in June. Although the latest signal of cooling inflation could nudge the Federal Reserve in the direction of a long-awaited interest-rate cut, big tech stocks sold off in the wake of the report.
Tesla ( TSLA ) shares suffered the steepest losses of any S&P 500 constituent, plummeting 8.4% following reports that the carmaker will postpone the unveiling of its robotaxi. The company previously indicated it would hold an event to introduce the autonomous transportation solution on Aug. 8, but Bloomberg reported the presentation has been pushed back to October . The decline for Tesla shares ended a string of 11 consecutive winning sessions.
Losses mounted for large-cap tech shares, as investors appeared to rotate away from stocks that have soared in 2024 into laggards that could be positioned for gains amid greater certainty that lower rates are forthcoming. In particular, stocks in the semiconductor industry came under heavy pressure. Shares of chip fabrication equipment suppliers Lam Research ( LRCX ) and Applied Materials ( AMAT ) fell 6% and 5.4%, respectively. Semiconductor behemoth Nvidia ( NVDA ) dropped 5.6%.
Airline stocks lost altitude after Delta Air Lines ( DAL ) reported lower-than-expected profits , citing increasing fuel costs and other fees. Delta shares sank 4% on the day, while shares of rival carriers also moved lower.
Shares of SBA Communications ( SBAC ), which owns and operates cellular towers and other wireless communications infrastructure, notched Thursday’s top performance in the S&P 500, jumping 7.5%. The gains came after the firm announced a shakeup of its executive leadership, with Saul Kredi stepping into the role of vice president and chief accounting officer. Kredi’s past experience includes leadership positions in the infrastructure and management consulting industries.
The drop in consumer inflation helped lift stocks across the housing industry, with firmer rate-cut expectations boosting optimism that mortgage rates could be headed downward. Shares of building products distributor Builders FirstSource ( BLDR ) jumped 7.4%, as did shares of flooring manufacturer Mohawk Industries ( MHK ).
In addition to construction suppliers, home builders benefitted from the expected decline in borrowing costs. D.R. Horton ( DHI ) shares added 7.3%, while Lennar ( LEN ) shares gained 6.9%.