Markets Shift: Stocks Decline, Gold Surges, Silver Reaches 24-Year Peak Amid Rising Inflation – What’s Driving Friday’s Market Movements?

Investor Sentiment and Market Reaction

• Inflation Concerns: Investor sentiment declined as the core Personal Consumption Expenditures (PCE) index, the Federal Reserve's preferred inflation measure, rose 2.9% year-over-year in July, reaching a five-month high. This increase has created uncertainty regarding the timing of potential interest rate cuts, especially following Fed Chair Jerome Powell's recent comments suggesting that rate reductions might be on the horizon.

• Market Performance: By midday trading in New York, all major equity benchmarks were down, with technology and high-growth stocks leading the decline. The Nasdaq 100 fell by 1.3%, ending a three-day winning streak, while Nvidia Corp. experienced a 3.4% drop, which was more significant than its previous day's 0.8% decline after reporting quarterly earnings that were viewed as positive but unremarkable.

Broader Market Trends

• Monthly Gains: Despite the recent pullback, all major indices are still on track to finish August with gains, marking the fourth consecutive month of positive performance.

• Precious Metals and Crypto Market: Traders are increasingly seeking inflation hedges amid rising concerns about potential policy missteps. In the cryptocurrency market, more speculative assets are experiencing steeper losses, reflecting the overall negative sentiment in the equity markets.