FX168 Financial News (North America) #美股收盘 #周四 (May 23). Strong economic reports raised the possibility that interest rates would remain high, and the US stock market generally fell, overshadowing market giant Nvidia's blowout performance report. Strong economic reports show that US business activity is growing at an accelerated pace, the job market is resilient, and Treasury yields in the bond market are rising. Higher yields are putting pressure on most markets, especially dividend-paying stocks such as real estate stocks.
The Dow Jones Index fell 605.78 points, or 1.53%, to close at 39065.26 points, the worst performing trading day of the year; the S&P 500 fell 0.74% to close at 5267.84 points; and the Nasdaq Composite Index fell 0.39% to close at 16736.03. Earlier in the session, the large-cap index and the tech-focused benchmark index both hit record highs.
(Source: FX168)
(Source: FX168
Nvidia failed to boost the market
Chipmaker and AI darling Nvidia surged 9.32% to break through $1,000 after the company reported better-than-expected first-quarter results and announced a 10-split 1 share split. Its CEO, Wong In-hoon, declared that “the next industrial revolution has begun.”
(Source: Google)
Nvidia's performance has always been the focus of attention on Wall Street, as traders want to see signs that the AI craze isn't going away. Previously, people were increasingly worried that Wall Street's fanaticism about the potential of artificial intelligence had created a bubble, prices had soared too high, and expectations had become too high. However, Nvidia's continued rapid growth has quelled some criticism.
With a market capitalization of over $2.5 trillion, Nvidia also has considerable influence on the S&P 500 index.
However, most individual stocks in Thursday's market index showed negative values, indicating insufficient market breadth. More than 400 companies were lower in the S&P 500, and IT was the only sector that rose.
Expectations of interest rate cuts are cooling down again
The good economic news may be bad news for Wall Street, and Thursday's economic data further confirmed this statement.
According to S&P Global's purchasing managers' survey released on Thursday, the S&P Global Purchasing Managers' Index (PMI) was 54.4 in May and 51.3 last month. The rapid report data was higher than economists' expectations, showing that despite the Federal Reserve's efforts to calm price pressure, business activity accelerated at the fastest rate in two years.
Standard & Poor's Global said in the report that not only has the growth of service companies improved, but there has also been an improvement in the hard-hit manufacturing industry.
Meanwhile, another report shows that the US job market remains stable despite high interest rates. The number of workers applying for unemployment benefits last week fell short of economists' expectations, indicating that the number of layoffs is still relatively low.
The number of first-time jobless claims for the week ending May 18 was 215,000, while economists surveyed by Dow Jones estimated 220,000. This result has heightened investors' concerns that the Federal Reserve will not cut interest rates anytime soon.
According to the Chicago Mercantile Exchange's FedWatch tool, traders currently expect only 51% chance that the Fed will cut interest rates at the September meeting, down from 58% a day ago and nearly 68% the week before. When the probability falls below 60%, people think it is no longer possible for the Federal Reserve to act.
Market views
Craig Johnson, Piper Sandler's chief marketing technician, wrote in a Thursday report that the market is “loosely based.” He said, “The mix of leaders in this market is very strange. Coupled with the collapse of transportation stocks and mediocre breadth readings, we are not convinced that the market will continue to rise from its current level.”
Chris Williamson, chief business economist at S&P Global Market Intelligence, said that the current upward pressure on inflation comes from manufacturing and services, which means “we are still a long way from the Fed's 2% target.”
The bond market
The 10-year US Treasury yield, which helps determine mortgage interest rates and other loans, rose to 4.47% from 4.43% on Wednesday evening.
Tracking the Federal Reserve's actions more closely, the two-year Treasury yield climbed from 4.87% to 4.93%.
This caused the shares of utilities and real estate companies to suffer the worst losses in the market. When interest rates are high, bonds pay more interest and attract income-seeking investors who would have bought utilities or real estate investment trusts to receive high dividends.
Individual stocks in focus
VF Corp shares fell about 3%. The company owns famous brands such as The North Face, Vans, and Timberland. However, the latest report showed quarterly losses and lower revenue than analysts' expectations.
Boeing led the decline in blue chips by 7.55%. Brian West, the company's chief financial officer, said that free cash flow is expected to be negative, and that the company's aircraft deliveries in the second quarter will not recover from the first quarter. Additionally, Boeing's best-selling aircraft faced several production challenges.
The biggest one-day decline in the S&P 500 index was Live Nation Entertainment. The stock fell 7.81%. The US Department of Justice sued the company and its Ticketmaster business for illegally monopolizing live activities in the country for antitrust charges.