U.S. markets fell 0.4% across the board as rising producer prices and oil costs pushed the probability of a September Fed rate hike to 70%, weighing heavily on tech and semiconductor shares.
The S&P 500 dropped 0.4% as rate-sensitive sectors faced selling pressure following the release of August producer price data. The index remains under pressure as investors await Friday's Consumer Price Index (CPI) report to gauge the Fed's next move.
The Consumer Price Index (CPI) report arriving Friday morning is considered the final inflation reading before the Fed's next meeting.
Nvidia shares fell 2.1%, acting as a major weight on both the S&P 500 and the Nasdaq Composite. The decline reflects a broader market pullback driven by macro-economic concerns rather than company-specific news.
Nvidia was the heaviest weight on both the S&P 500 and the Nasdaq Composite, contributing significantly to their 0.4% decline.
Bitcoin fell alongside traditional assets, suggesting that immediate fears regarding Federal Reserve interest rate hikes are currently outweighing long-term concerns about currency debasement. The decline highlights a shift in investor sentiment where liquidity tightening is prioritized over inflation hedging.
Investors are currently more focused on the fundamental impact of imminent interest rate hikes than on long-term currency debasement concerns.
Major U.S. indices retreated 0.4% on Thursday as hot producer price data and surging oil costs fueled expectations of a Federal Reserve rate hike. Markets now price in a 70% probability of an increase at the upcoming September meeting, with rate-sensitive tech stocks like Nvidia leading the decline.
The report showed wholesale prices rising faster than expected, which increases the likelihood of the Federal Reserve implementing aggressive interest rate hikes to curb inflation.