What factors are causing the markets to decline on Wednesday, resulting in the Nasdaq reaching its lowest level in four weeks, while the energy sector shows a strong rebound?

U.S. stocks continued their decline on Wednesday without reversing their negative momentum, as investors approached Thursday’s inflation data release with caution. The Nasdaq 100 briefly reached its lowest point since July 11, dropping 1% by midday trading. Recent increases in energy prices have raised concerns about inflation. WTI crude oil has surged to $83 per barrel, the highest level since November 2022, while natural gas has jumped over 6%, reaching its highest level since January 2023. Economists expect the annual inflation rate for July to rise from 3% to 3.3%, ending a year-long period of declining rates. On Wednesday, the S&P 500 fell 0.6%, the Dow Jones Industrial eased 0.4%, and tech and small caps, represented by the Nasdaq 100 and Russell 2000, fell 1% and 0.9% respectively. In midday trading, major U.S. equity ETFs, including the SPDR S&P 500 ETF Trust (SPY), the SPDR Dow Jones Industrial Average ETF (DIA), and the Invesco QQQ Trust (QQQ), saw declines. The Energy Select Sector SPDR Fund (XLE) outperformed, rising 1.22%, while the Consumer Discretionary Select Sector SPDR Fund (XLY) and the Technology Select Sector SPDR Fund (XLK) both dropped 1.1%. The Mortgage Bankers Association reported a 3.1% decline in mortgage application volume last week, the third consecutive week of declines, as the 30-year fixed mortgage rate rose to 7.09%, the highest level since November 2022. Several companies saw significant changes in their stock prices. Mirati Therapeutics, Inc. (MRTX) jumped 30% after reporting better-than-expected Q2 results. PENN Entertainment, Inc. (PENN) rose nearly 7% following its announcement of a partnership with Walt Disney Co.’s (DIS) ESPN for a sports betting venture named ESPN Bet. Rivian Automotive, Inc. (RIVN) fell 8% despite better-than-expected results last quarter due to declines in the EV industry. Upstart Holdings, Inc. (UPST) experienced a 33% decline, the largest since May 2022, as Q3 revenue outlook fell short of analysts’ expectations. Axon Enterprises, Inc. (AXON) saw a 14% gain in response to upbeat Q2 results. In the commodities market, crude oil rose 0.4%, with WTI crude trading at $83 per barrel, and Treasury yields remained steady. European equity indexes closed in the green, and gold fell 0.5% to $1,915/oz. Bitcoin (BTC) declined 0.9% to $29,510.