Trading Day: Tech outlook is cloudy, private debt markets show choppiness

Wall Street experienced modest reversals on Thursday, with megacap tech weakness dragging down major indices while European and Asian stocks saw gains. The dollar's rally and oil slump also paused, creating a day of mixed signals across global markets.

Inflationary pressures persist in the U.S., with annual PCE inflation exceeding 4% for the first time in three years, mirroring CPI figures that are also more than double the Federal Reserve's 2% target. Despite this, traders have recently reduced expectations for year-end Fed tightening by 15 basis points, potentially influenced by softer month-on-month PCE data and a significant drop in oil prices from recent peaks.

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What's not to hike?

The private debt market is showing signs of strain, with investors attempting substantial withdrawals from major credit funds. For instance, investors in Ares Management's $23 billion flagship private credit fund sought to redeem 14.4% of shares in the second quarter, though redemptions were capped at 5%. Similarly, Apollo placed a 5% cap on withdrawals from its $26 billion private credit fund after investors requested to pull 17% of shares. While spillover into public markets has been limited, sentiment in the sector remains bleak.

The article also highlights specific market movements, including a surge in the "SOX" chip index and the Roundhill memory stocks ETF, with Micron shares jumping 15%. Conversely, Apple and Dell saw significant drops of 6%, and Microsoft experienced its worst June ever, falling 21%. In currency markets, the Mexican peso was the biggest emerging market gainer after its central bank held rates steady.

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If the withdrawal cap fits