VIX Stages Double-Digit Spike As Risk Off Takes Over; Chipmakers Fail To Rebound, Weight Loss Giants Eli Lilly, Novo Tumble: What's Driving Markets Thursday?

It’s another risk-off day on Wall Street, with all major U.S. indices trading in the red. The CBOE Volatility Index (VIX), often referred to as the market’s fear gauge, spiked over 10%, reaching levels last seen in late April.

Both the S&P 500 and the Nasdaq 100 indices declined by 0.6%, while the Dow Jones Industrial Average fell 0.7%, potentially ending a streak of six consecutive positive sessions.

Small-cap stocks also succumbed to the broader negative sentiment, with the Russell 2000 index dropping 0.7%.

Chicago Fed President Austan Goolsbee, a known “dove” on the board, expressed optimism about progress on inflation and the U.S. economy’s resilience in avoiding a recession. He did not commit to a potential rate cut in September.

Following Wednesday’s sell-off triggered by concerns over increased U.S. chip export restrictions to China, semiconductor stocks remained broadly weaker, with the iShares Semiconductor ETF SOXX down by 0.6%. Despite this, Nvidia Corp. NVDA defied the trend, rising 1.8%.

Significant volatility erupted in the health care sector, particularly within the weight loss drug industry. The market duopoly of Eli Lilly and Company LLY and Novo Nordisk A/S NVO face heightened competitive threats from Pfizer Inc. PFE and Roche Holding Ltd RHHBY, both of which recently announced developments to enter this lucrative market.

Shares of Eli Lilly plunged 5.6%, marking their worst session since mid-March 2021, while Novo Nordisk shares dropped 5%, their worst performance since August 2022.

On the economic data front, jobless claims rose more than expected last week and continuing claims reached their highest level since November 2021, indicating a cooling trend in the labor market.

The U.S. dollar acted as a safe haven, rising 0.3%, while Treasury yields inched higher across the curve. The European Central Bank kept interest rates unchanged, as expected, keeping the door open for September.

In commodities, growth-sensitive copper tumbled over 3%, hitting its lowest level since mid-April. Silver eased by 0.9% and gold remained flat. Oil prices slipped 0.3%, while natural gas surged over 4%, nearly recouping Wednesday’s sharp losses following a weaker-than-expected buildup in inventories last week.

Bitcoin BTC/USD edged 0.4% lower, eyeing a second consecutive negative close.

Thursday’s Performance In Major US Indices, ETFs

According to Benzinga pro data:

• The SPDR S&P 500 ETF Trust SPY was 0.6% lower to $553.74.
• The SPDR Dow Jones Industrial Average DIA fell by 0.7% to $409.10.
• The tech-heavy Invesco QQQ Trust (ARCA: QQQ) fell 0.5% to $479.14.
• Sector-wise, the Energy Select Sector SPDR Fund XLE outperformed, up by 1%, while the Health Care Select Sector SPDR Fund XLV lagged, down 1.5%.

Thursday’s Market Movers

• Taiwan Semiconductor Manufacturing Company Ltd. TSM fell 0.9% despite reporting stronger-than-expected results last quarter.
• Other stocks reacting to corporate earnings were Abbott Laboratories ABT, down 3.5%, Alcoa Corporation AA, down 1%, SL Green Realty Corp. SLG down 2.5%, Kinder Morgan, Inc. KMI, up 3.8%, Domino’s Pizza, Inc. DPZ, down 13%, Blackstone Inc. BX, up 2.6%, Marsh & McLennan Companies, Inc. MMC, down 1%, Alaska Air Group, Inc. ALK, down over 5%, Cintas Corp. CTAS, up over 6%, D.R. Horton, Inc. DHI, up 13%, Virtu Financial Inc. VIRT, up 18% and Novartis AG NVS, down 4.4%.
• Companies reporting after the close include Netflix, Inc. NFLX and Intuitive Surgical, Inc. ISRG.

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