Market Snapshot: U.S. stocks fall as a slide in tech shares weighs on Wall Street ahead of July inflation data

It was the five drop in six sessions for the S&P 500.

What’s driving markets

Investors are waiting for the July consumer price index data due Thursday and producer prices due Friday to get more clues on whether the Federal Reserve is done with its interest rate hikes.

Economists polled by the Wall Street Journal forecasted the consumer price index to rise 0.2% in July, at the same pace from the prior month. They also expected the annual rate of inflation to accelerate to 3.3% from 3% in the prior month.

The so-called core CPI, which excludes food and energy prices, is expected to grow 0.2% in July. The rate of core inflation over the past 12 months is expected to slow to 4.7% in July from 4.8% in the prior month.

“I don’t think it [the CPI data] is going to be a big market mover tomorrow,” Kathryn Rooney Vera, chief market strategist at StoneX, said in an interview.

“I think what the market is focused on is soft landing, being if the Fed is able to get the economy to decelerate in terms of inflation pressures towards the 2% target without eliciting any form of economic contraction,” said Rooney Vera.

Weighing on the sentiment is that news of falling consumer prices in China — which fell 0.3% for the year to July — dovetails with the country’s weak trade data released this week and raises concerns that growth is faltering in the world’s second biggest economy.

“China is now witnessing the actual cost of goods both in stores and at the factory gate falling. It is indicative of a significant slowdown in the Chinese economy, which is beset by high levels of indebtedness,” said Steve Clayton, head of equity funds, Hargreaves Lansdown.

However, traders also note that deflationary pressures emanating from China may help further reduce goods inflation in the U.S. and elsewhere, thereby helping central banks to soon stop raising borrowing costs.

“Markets don’t appear too adventurous ahead of the U.S. CPI; instead, traders are reverting the risk-off trade from overnight markets after yet another August storm front passed. But much of the move is likely pre-U.S. CPI housekeeping, given that stocks, bonds and currency markets react wildly to CPI beats and misses,” said Stephen Innes, managing partner at SPI Asset Management.

What’s more, the second quarter corporate earnings season continues, with Roblox
RBLX,
-20.54%,
Penn Entertainment
PENN,
+8.65%,
Wynn Resorts
WYNN,
-1.23%
and Walt Disney
DIS,
-0.65%
presenting their numbers. Penn Entertainment stock surged after agreeing on a sports-bet partnership with Disney’s ESPN.

There are no major U.S. economic data due on Wednesday.

Companies in focus

• Lyft Inc.
  LYFT,
  -8.91%
  fell 8% Wednesday after the ride sharing service reported quarterly results.

• Carvana Co.’s stock
  CVNA,
  -4.88%
  was down 4.2% Wednesday after the used-car retailer revised its outlook.

• Roblox Corp.
  RBLX,
  -20.54%
  shares fell 20% after the gaming company fell short of bookings expectations for the second quarter and saw its losses swell.

• Penn Entertainment Inc. shares
  PENN,
  +8.65%
  jumped 6.3% after the company reached a deal with Walt Disney Co.’s ESPN to rebrand Penn’s sportsbook as ESPN Bet. Shares of sports-betting rival DraftKings Inc.
  DKNG,
  -9.48%
  were down 6%, and FanDuel owner Flutter Entertainment
  FLTR,
  -3.42%,
  which also reported results, slumped in London trade.

• Wendy’s Co. 
  WEN,
  +0.25%
  slipped 0.4% Wednesday, after the fast-food burger chain reported second-quarter profit that topped expectations but revenue that came up shy, while affirming the full-year outlook.

• Rivian Automotive Inc.
  RIVN,
  -8.15%
  shares fell 7.5% on Wednesday after the EV maker reported a narrower-than-expected quarterly loss, revenue that beat Wall Street expectations, and called for higher production numbers this year.