S&P 500 posts longest losing streak in a month ahead of key inflation data

Benchmark indices on Wall Street continued to witness profit booking for the third straight day, as valuation concerns and expectations from a key inflation gauge overshadowed some strong macro data reported through the day.

The Dow Jones fell another 170 points on Thursday, taking the total fall from Tuesday's intraday high to 800 points. The S&P 500 registered its longest losing streak in a month, while Nasdaq was led lower by recent outperformers like Oracle. Stocks have taken a downturn after US Fed Chair Jerome Powell called valuations "fairly highly priced" at an event earlier this week.

Oracle Corp. shares fell another 5% on Thursday and are now down 16% from their recent peak, after an analyst issued a "sell" recommendation, projecting a 40% downside on the stock, stating that the street is "overestimating" the benefits the recent AI deals will have on the company's performance.

A slew of macro data was reported on Thursday, starting with the third revised estimates of the Q2 GDP, which were raised to 3.8% from 3.3% earlier, indicating that the US economy grew at its fastest pace in two years. Initial jobless claims also fell for the week ending September 20, and were below expectations. Durable goods orders rebounded to 2.9% in August after two months of negative numbers, while wholesale inventories unexpectedly fell contrary to expectations of growth. New home sales rose 20.5% in August, the most since January 2022.

What the Macro data did is lead to a slight bump up in treasury yields, which also pressured the markets and brought down the probability of a 25 basis points rate cut from the Fed in October to 85% from 92% previously.

All eyes today will be on the Personal Consumption Expenditure (PCE) inflation data, the Fed's preferred inflation gauge. Expectations are that core PCE could slow to 0.2% month-on-month in August from 0.3% in July, but may remain elevated on a year-on-year basis at 2.9%.