Ritika Janiya
Wall Street today saw some stocks soar while others plummeted. This was because of new price data that created expectations that government interest rates could be lowered.
On Wall Street today, it was a mixed day for various kinds of stocks. The judgment of the day came from small-company stocks, while big-company stocks did not do as well. This occurred because new data on inflation shifted investor sentiment to believe the federal government might ease up on interest rates.
Upon the morning session, the Dow Jones, which measures the big guys, lost a teensy-weensy 0.02%. The Standard and Poor’s 500, which keeps an eye on 500 bigger companies, had a small increase of 0.04%. The Nasdaq dropped a bit by 0.04%, focusing on technology companies.
At the same time, smaller companies did much better. The Russell 2000 index, which tracks these smaller businesses, went up a big 2.1%. That made it the best performer of the day.
These moves came in after new numbers showed that prices consumers pay actually went down last month. This marked the first decrease in the price level for four years. The costs of gasoline were lower, and rents didn’t shoot up as fast.
On the back of this news, investors had presumed that the Federal Reserve—which controls how much it costs to borrow money—might be swayed to lower these costs, thus making it cheaper for firms to borrow and invest in growing their businesses.
Technology firms like Apple, Microsoft, Alphabet (the parent of Google) and Nvidia were among the failures today. Their stocks dropped 0.5% to 0.7% while seedy investors claimed that lower interest rates may not benefit companies like these.
Other big corporations also had a bruising day. Shares of PepsiCo slid 1.4 percent, despite the company’s report of better-than-expected profit. Delta Air Lines did worse, tumbling 8.1 percent after saying it pulled in slightly less revenue than investors had expected.
Interest rates in the bond market, where large institutions and governments lend to and borrow from each other, ended up falling. The yield on the 10-year Treasury bond dropped to 4.19 percent from 4.28 percent on Wednesday. That is, investors are willing to accept lower returns on secure investments on a bet that interest rates may decline.
This means that gold increased by over 1% to above $2,400 an ounce on reports regarding consumer prices. The price tag on silver added 2.7%, a factor that reveals the rush for investors to get safe havens for money.
Crude oil prices picked slightly as well. The price of Brent crude—a benchmark globally—sat above $85 a barrel. U.S. West Texas Intermediate crude oil, popularly abbreviated as WTI, inched up to $82.39 a barrel.
In other words, today Wall Street pumped up shares of smaller companies following new data suggesting prices are slipping for consumers. Big technology and airline companies did not fare as well, owing to investors’ uncertainties about how lower interest rates might affect them. Generally, though, mixed market sentiment brightened at the possibility of lower borrowing costs.
