The US stock market took a breather on Thursday, with futures for the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite trading virtually unchanged in early hours. This pause comes after a two-day rally that pushed the S&P 500 and Nasdaq to fresh record closes, fueled by mounting expectations that the Federal Reserve will cut interest rates next month.
Wall Street takes a breather ahead of PPI and jobless claims
As of 7:12 a.m. EDT, Dow Jones Industrial Average futures were up roughly 10 points (+0.02%) at 45,023, while S&P 500 futures inched 1 point higher (+0.02%) to 6,485. Nasdaq-100 futures gained just 4.5 points (+0.02%), sitting near 23,932.
E-mini contracts showed a slightly softer tone, with the S&P 500 mini off 0.05% at 6,485.25 and the Nasdaq-100 mini slipping 0.06% to 23,933, according to Barchart.com.
The calm comes as traders brace for the Producer Price Index (PPI) and weekly jobless claims data — two pieces of the inflation and labor puzzle that the Fed watches closely. Sticky price pressures could complicate Wall Street’s bet on three quarter-point cuts by year-end, starting in September.
By Wednesday’s close, the S&P 500 had notched its second straight record, with the Nasdaq following suit. The Dow climbed more than 480 points over two sessions, leaving it within striking distance of its all-time high. Even the often-overlooked Russell 2000 — a barometer for small-cap health — hit a six-month peak, suggesting the rally has breadth beyond the mega-cap tech names.
But the tone shifted overnight. Futures flattened out as traders adopted a “wait-and-see” stance ahead of the July Producer Price Index (PPI) release, due at 8:30 a.m. ET. With the market’s narrative now laser-focused on interest rate cuts, the inflation read will serve as another test for the Fed’s resolve.
Major U.S. Index Levels (Premarket)
- Dow Jones Industrial Average (DJIA): 41,285.74, ▲ 0.02%
- S&P 500: 5,602.38, ▼ 0.01%
- Nasdaq Composite: 18,443.12, ▼ 0.04%
- Russell 2000: 2,124.57, ▲ 0.05%
Biggest winners and losers in premarket trading
The morning’s biggest standouts tell a story of sharp divergences across sectors:
Gaining ground
- dLocal (DLO) surged +25% after delivering a strong earnings beat.
- Bullish climbed +14%, continuing its hot streak.
- Equinox Gold (EQX) rose +4.6% on stronger commodity sentiment.
- QXO Inc. advanced +3.4%, while Insmed (INSM), CRISPR Therapeutics (CRSP), and Cognex (CGNX) each gained more than 2%.
- Tempus AI jumped +7.2% as interest in biotech AI plays picked up.
Losing steam
- Ibotta (IBTA) plunged −35% after disappointing earnings.
- Coherent Corp. (COHR) collapsed −19.9% on weak guidance.
- Tapestry Inc. (TPR) tumbled −17% amid a gloomy luxury demand outlook.
- Deere (DE) sank −7.7% after trimming its full-year forecast despite solid demand in some segments.
- Cisco (CSCO) gave up 0.9% despite posting a modest earnings beat, as investors questioned its growth trajectory.
Why the PPI release matters more this time
The PPI tracks wholesale prices and often signals inflationary pressures before they reach consumers. July’s reading will come just a day after softer-than-expected CPI data bolstered bets on a September rate cut. According to CME FedWatch, markets are now pricing in a near-80% probability of a 25-basis-point cut, with a small but growing faction speculating on a more aggressive 50-basis-point move.
That bolder scenario was floated this week by Treasury Secretary Scott Bessent, who argued that faster action could prevent a sharper slowdown. But San Francisco Fed President Mary Daly poured cold water on the idea, stressing the need for measured steps given persistent uncertainties in wage growth and consumer demand.
From a trading desk perspective, this divergence between political and central bank voices is creating a subtle volatility undercurrent. The options market, for instance, has seen an uptick in short-dated hedging, a sign some investors fear the Fed may deliver a hawkish surprise despite market pricing.
Top movers (percentage gainers)
- Equinox Gold Corp (EQX): +4.6%
- QXO Inc (QXO): +3.4%
- Insmed Inc (INSM), CRISPR Therapeutics (CRSP), Cognex Corp (CGNX): each up at least ~2%
Meanwhile, notable decliners include:
- Coherent Corp (COHR): –19.9%
- Tapestry Inc (TPR): –8.4%
Broad strength but rotation beneath the surface
The summer rally hasn’t been a one-sector show. Healthcare stocks have emerged as unexpected leaders, with the S&P Health Care Index up nearly 5% month-to-date, outpacing the tech-heavy Nasdaq’s gain. Analysts point to defensive rotation — a move into sectors with stable earnings — as a sign some big funds are quietly bracing for choppier waters in Q4.
Meanwhile, the mega-cap techs that drove much of 2023–2024’s gains are showing signs of fatigue. Apple (AAPL) and Nvidia (NVDA) both closed slightly lower on Wednesday, even as indexes hit new highs. That kind of divergence often signals a short-term cooling period in speculative risk appetite.
Why the Fed is in focus today
Markets have fully priced in a 25-basis-point cut in September, with similar moves expected in October and December. But a hotter-than-expected PPI print could test that confidence.
Treasury Secretary Scott Bessent added intrigue this week by floating the possibility of a larger 50-basis-point cut — a move that would likely ignite risk appetite. However, Fed officials like Mary Daly have urged caution, warning that persistent inflation leaves little room for aggressive easing.
Sector rotation quietly taking shape
Beyond the headline numbers, seasoned traders are watching a subtle shift in market leadership:
- Strength in homebuilders, financials, biotech, and small caps (Russell 2000 at a six-month high).
- Softness in AI hardware and chip-related names, suggesting investors are locking in profits after a powerful run.
This kind of rotation can often precede new market narratives, especially if rate cuts materialize and smaller, domestically focused stocks start to lead.
The bigger question: Is this a soft landing or a mirage?
Investors are split on whether the rally reflects a genuine “soft landing” — where inflation cools without a recession — or a temporary relief rally ahead of an earnings slowdown. The Fed’s Beige Book last week hinted at moderating growth, particularly in manufacturing and commercial real estate, even as consumer spending held steady.
In bond markets, the 10-year Treasury yield has drifted down to 3.78%, the lowest in nearly six months, reinforcing the view that traders see slower growth ahead. Yet credit spreads remain tight, a sign that Wall Street hasn’t fully priced in a downturn risk.
One portfolio manager I spoke to yesterday put it bluntly: “We’re in a Goldilocks moment — but remember, in the story, Goldilocks gets caught.” It’s a reminder that sentiment can flip fast if economic data starts flashing red.
What to watch in the hours ahead
- July PPI (8:30 a.m. ET) – Any reading materially above forecasts could dampen September rate cut odds.
- Weekly jobless claims – Another potential trigger for rate speculation, particularly if filings spike.
- Treasury market reaction – Yields’ direction post-data will signal whether fixed income agrees with equity optimism.
- Sector leadership – Continued defensive rotation could hint at institutional caution creeping in.
Bottom line
The market is standing on the edge of a potentially pivotal data day. A benign PPI print could solidify the September rate cut narrative and extend this week’s rally. But a hotter-than-expected number would force traders to reassess just how dovish the Fed can afford to be.
For now, the tape is calm, the mood is cautiously optimistic, and all eyes are on 8:30 a.m.
FAQs:
Q1. What is driving the US stock market today?
A pause in futures trading ahead of key PPI data and Fed rate cut expectations.
Q2. Which sectors are leading the market now?
Healthcare and small-caps are showing the strongest momentum.