What you need to know…

The S&P 500 Index ($SPX) (SPY) Wednesday closed down -0.70%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.54%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.12%.

Stocks on Wednesday posted moderate losses, with the S&P 500 and Nasdaq 100 dropping to 4-week lows.  Weakness in chip stocks weighed on the technology sector and the overall market. Also, long liquidation pressures undercut stocks ahead of Thursday's monthly U.S. consumer price report. However, losses were limited by strength in energy stocks, as the price of WTI crude rose more than +1% to an 8-3/4 month high. 

The markets are awaiting Thursday’s U.S. consumer price report for market direction.  The July CPI is expected to increase to +3.3% y/y from +3.0% y/y in June, although July CPI ex-food and energy is expected to ease to +4.7% y/y from +4.8% y/y in June. 

The markets are discounting the odds at 12% for a +25 bp rate hike at the September 20 FOMC meeting and 34% for that +25 bp rate hike at the November 1 FOMC meeting. 

Global bond yields on Wednesday were mixed.  The 10-year T-note yield fell -1.6 bp to 4.006%.  The 10-year German bund yield rose +2.8 bp to 2.497%.  The 10-year UK gilt yield fell -2.0 bp to 4.366%. 

Overseas stock markets Wednesday settled mixed.  The Euro Stoxx 50 closed up +0.66%.  China’s Shanghai Composite Index today closed down -0.49%.  Japan’s Nikkei Stock Index closed down -0.53%.

Today’s stock movers…

Weakness in chip stocks weighed on the technology sector and the broader market.  Nvidia (NVDA) closed down more than -4% to lead losers in the S&P 500.  Also, Broadcom (AVGO) and Marvell Technology (MRVL) closed down more than -3%.  In addition, Advanced Micro Devices (AMD) and ON Semiconductor (ON) closed down more than -2%, and Applied Materials (AMAT), Lam Research (LRCX), NXP Semiconductors (NXPI), and Globalfoundries (GFS) closed down more than -1%. 

U.S. regional bank stocks fell for a second day after Moody’s Investors Service on Tuesday lowered credit ratings for ten small and midsize U.S. banks and adopted a "negative" outlook for 11 other lenders.  As a result, KeyCorp (KEY), Lincoln National (LNC), and M&T Bank (MTB) closed down more than -3%.  Also, Truist Financial (TFC), PNC Financial Services Group (PNC), and Zions Bancorp (ZION) closed down more than -2%.

IAC Inc (IAC) closed down more than -16% after reporting Q2 revenue of $1.11 billion, weaker than the consensus of $1.12 billion.

Lyft (LYFT) closed down more than -10% after reporting Q2 revenue per active rider of $47.51, below the consensus of $48.52. 

ZipRecruiter (ZIP) closed down more than -10% after forecasting Q3 revenue of $147 million-$153 million, weaker than the consensus of $170.7 million, and withdrawing its full-year Ebitda guidance due to the “rapidity and inconsistency of the cooling hiring environment.” 

Super Micro Computer (SMCI) closed down more than -23% after forecasting Q1 adjusted EPS of $2.75-$3.50, the midpoint below the consensus of $3.14. 

Xylem (XYL) closed down more than -2% after Spruce Point Capital Management said it is short-selling the stock and sees a 30% to 45% downside risk for the stock price. 

Axon Enterprise (AXON) closed up more than +14% to lead gainers in the S&P 500 after reporting Q2 net sales of $374.6 million, stronger than the consensus of $350.7 million.

Akamai Technologies (AKAM) closed up more than +8% after reporting Q2 adjusted EPS of $1.49, better than the consensus of $1.41, and raising its full-year adjusted EPS estimate to $5.87-$5.95 from a previous estimate of $5.69-$5.84.

FleetCor Technologies (FLT) closed up more than +6% after reporting Q2 revenue of $948.2 million, above the consensus of $945.8 million, and raising the lower limit of its full-year revenue forecast to $3.84 billion-$3.86 billion from a prior forecast of$3.82 billion-$3.86 billion.

Charles River Laboratories International (CRL) closed up more than +4% after reporting Q2 adjusted EPS of $2.60, stronger than the consensus of $2.63.

Energy stocks and energy service providers moved higher Wednesday, as the price of WTI crude rose more than +1% to an 8-3/4 month high.  As a result, APA Corp (APA) closed up more than +2%.  Also, Marathon Oil (MRO), Haliburton (HAL), Exxon Mobil (XOM), Hess Corp (HES), Marathon Petroleum (MPC), Schlumberger (SLB), Valero Energy (VLO), and Baker Hughes (BKR) closed up more than +1%.

Penn Entertainment (PENN) closed up more than +9% after announcing a long-term exclusive partnership with Disney’s ESPN.

CF Industries (CF) closed up more than +4% after Stifel raised its price target on the stock to $88 from $74. 

Across the markets…

September 10-year T-notes (ZNU23) Wednesday were little changed, down -0.5 of a tick, and the 10-year T-note yield fell -1.6 bp to 4.006%.  Sep T-notes Wednesday closed little changed on long liquidation and position squaring ahead of Thursday’s U.S. July CPI report.  T-notes also had some negative carryover from Wednesday’s fall in 10-year German bund prices. 

T-notes found support Wednesday from a decline in U.S. inflation expectations.  The 10-year breakeven inflation rate fell to a 2-1/2 week low Wednesday at 2.327%.  Also, strong demand for the Treasury’s $38 billion auction of 10-year T-notes supported T-note prices as the auction had a bid-to-cover ratio of 2.56, above the 10-auction average of 2.41. 

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