Stocks finished lower Thursday after a blowout set of first quarter earnings from Nvidia was partly offset by renewed inflation risks tied to a surprisingly resilient economy.
The Dow Jones Industrial Average marked its worst day of the year, tumbling 605 points, or 1.53%, to 39,065.26.
The S&P 500 fell 0.74%, to 5,267.84, and the tech-heavy Nasdaq slipped 0.39% to 16,736.03. Both indexes reached record highs earlier the session.
AI chip maker Nvidia shattered Wall Street's sales and earnings forecasts Wednesday, posting net income of $15.24 billion on record revenue of just over $26 billion.
Meanwhile, minutes of the Fed's May policy meeting suggested concern about the slow pace of inflation progress and hinted at the need for higher rates to achieve it.
“Markets tend to take breather heading into a long holiday weekend,” Jamie Cox, managing partner for Harris Financial Group. “The Fed minutes provided the catalyst and not even Nvidia could refocus markets on the positives.”
Updated at 1:55 PM EDT
Stock lower
The S&P 500 was last marked 19 points, or 0.3% lower heading into the final hours of trading, with Dow marked nearly 500 points into the red amid a major pullback in Boeing (BA) and broader declines for Intel (INTC) and Johnson & Johnson (JNJ) .
The Nasdaq, meanwhile, was marked 3 points lower after hitting a fresh intra-day record high of 16,966.38 points earlier in the session.
Nvidia is having a huge day, but that's not enough to rescue the overall market today which is sinking from Boeing's selloff on weak Q2 delivery expectations and a rough day for Intel. #DOW -504 #NASDAQ +16. $NVDA +11%. @KCBSRadio
— Jason Brooks (@brookskcbsradio) May 23, 2024
Updated at 12:06 PM EDT
Not 7-Up
The Federal Home Loan Mortgage Corporation, better-known as Freddie Mac, said 30-year fixed mortgage rates dipped blow 7% for the first time in more than a month last week amid a pullback in Treasury bond yields and softer inflation data.
Freddie Mac pegged the average 30-year fixed rate at 6.94% over the week ending on May 23, down from 7.02% over the prior period.
“Spring homebuyers received an unexpected windfall this week, as mortgage rates fell below the seven percent threshold for the first time in over a month,” said chief economist Sam Khater.
“Although this week’s data on previously owned home sales showed a decline, total inventory of both new and existing homes is up," he added. "Greater supply coupled with the recent downward trend in rates is an encouraging sign for the housing market.”
Related: Housing has a problem bigger than interest rates
Updated at 10:53 AM EDT
All chips in
Nvidia shares are extending their early gains, rising more than 10% in mid-morning trading to $1,044.00 each, following last night's "near perfect" fist quarter earnings report and a solid near-term revenue forecast.
"I’d say it was a pretty perfect quarter. Revenue beat high expectations—more than triples revenue—and guides higher," said Nancy Tengler, CEO and chief investment officer at Laffer Tengler Investments. "The dividend increase (150%) and the ten for one stock split makes great headlines and an excellent retail narrative.
"It will spill over into other tech names and our feeds our investing theme of buying old economy companies who are pivoting to digitization, cloud computing and generative AI cloud computing," she added. "Good for stocks, good for the market and *good* for productivity!"
Related: Analysts overhaul Nvidia stock price targets as earnings address key problem
Updated at 10:41 AM EDT
Live and in color
Live Nation Entertainment (LYV) shares moved sharply lower in mid-morning trading after the Justice Department confirmed reports that it will call for the breakup of the group, arguing that is Ticketmaster division artificially inflations live event costs.
"Live Nation relies on unlawful, anticompetitive conduct to exercise its monopolistic control over the live events industry in the United States at the cost of fans, artists, smaller promoters, and venue operators,” U.S. Attorney General Merrick Garland said. "It is time to break up Live Nation."
The DoJ said Live Nation, which bought Tickermaster for $2.5 billion in 2010, controls around 80% of the concert ticketing market and nearly two thirds of major concert venues.
Live Nation shares were marked 5.9% lower at $95.53 each, trimming their 2024 decline to around 4.5%.
The DOJ is planning to hit $LYV with an antitrust lawsuit. Fmr. tech & competition policy adviser Prof. @superwuster says, "This is overdue and this is what the government should be doing." pic.twitter.com/LV1hHknd1Y
— Squawk Box (@SquawkCNBC) May 23, 2024
Updated at 9:54 AM EDT
Rocking economy
S&P Global's first estimate of U.S economic activity over the month of May jumped to the highest levels in more than two years, rising to 54.4 points and well past the 50-point threshold that separates growth from contraction.
Inside the report, a sub-index of the prices companies are paying from wholesales rose to the highest levels in more than 18 months, suggesting an extension of inflation pressures into the summer months.
Benchmark 10-year Treasury note yields added 4 basis points following the release, and were last marked at 4.463%, while 2-year notes jumped 4 basis points to 4.925%.
US economy enjoys a strong May: Flash US #PMI Composite Output Index at 54.4 (April: 51.3), a 25-month high, amid a broad-based upturn (https://t.co/OrkzQt86FP) pic.twitter.com/Zm2o4wWIM3
— Chris Williamson (@WilliamsonChris) May 23, 2024
Updated at 9:43 AM EDT
Record highs
The S&P 500 was marked 17 points, or 0.33% higher, in the opening minutes of trading, after hitting a fresh all-time peak of 5,341.88 points at the opening bell.
The Nasdaq, meanwhile, was up 137 points, or 0.82%, as Nvidia surged 9.5% to pass the $1,000 mark for the first time on record. The Dow, meanwhile, fell 188 points,
S&P 500 Opening Bell Heatmap (May 23, 2024)$SPY +0.41% 🟩$QQQ +0.82% 🟩$DJI -0.11% 🟥$IWM +0.15% 🟩 pic.twitter.com/pSeIyvaqUR
— Wall St Engine (@wallstengine) May 23, 2024
Updated at 9:25 AM EDT
DuPont split
Dupont (DD) shares are set to open firmly higher after the venerable industrial group unveiled plans to spilt into three separate companies focused on water, electronics and chemicals.
CEO Ed Breen will also step down, but join the board as executive chairman, making way for current CFO Lori Koch to take over on June 1.
Updated at 8:36 AM EDT
Working, working
New applications for jobless benefits fell by 8,000 last week to 215,000, the Labor Department said, a level that takes the week average to around 219,750. Continued claims, meanwhile, rose modestly to 1.974 million, bang in line with Street forecasts.
Stocks were little-changed following the data release, with futures tied to the S&P 500 indicating a 39 point opening bell gain and those linked to the Nasdaq suggesting a 223 point advance.
Benchmark 10-year note yields edged higher, to 4.422% , while 2-year notes were pegged at 4.877%.
INITIAL JOBLESS CLAIMS: 215K V 220KE; CONTINUING CLAIMS: 1.794M V 1.793ME
— Open Outcrier (@OpenOutcrier) May 23, 2024
Apr Chicago Fed National Activity Index: -0.23 v +0.13e
Check back for updates throughout the trading day
Nvidia (NVDA) smashed Wall Street's sales and earnings forecasts last night, posting net income of $15.24 billion on record revenue of just over $26 billion. It also boosted its regular dividend by 150% and unveiled plans for a 10-for-1 stock split in early June.
The group also forecast current-quarter revenues in the region of $28 billion, suggesting robust demand for its AI-powering processors and boosting the value of rival chipmakers who are likely to grab a smaller share of the rapidly expanding market.
Nvidia $NVDA basically controlling the entire stock market pic.twitter.com/kHTLfUYzfh
— Barchart (@Barchart) May 23, 2024
Nvidia shares are likely to open north of the $1,000 mark for the first time on record, dragging the Nasdaq to an all-time high and lifting rivals such as Advanced Micro Devices (AMD) , Micron Technology (MU) and Broadcom (AVGO) firmly into the green.
Away from tech, minutes of the Fed's May policy meeting, published late Wednesday, suggested concern about the slow pace of inflation progress and hinted at the need for higher rates to achieve it.
Fed Chairman Jerome Powell, however, as well as other key members of the central bank's rate-setting committee have pushed back on the idea of higher rates in recent weeks, focusing the markets on the new growth and inflation forecasts from next month's meeting in Washington.
"Given Chairman Powell's more dovish comments recently suggesting that the next policy move would most likely see an easing of rates, Fed speakers have made it decidedly clear they need to see a series of more favorable inflation-related data before they ease policy," said LPL Financial's chief global strategist, Quincy Krosby.
Benchmark 2-year Treasury note yields were marked 2 basis points higher in the overnight session at 4.862% while 10-year notes were pegged at 4.418%.
The dollar index, meanwhile, fell 0.2% against a basket of its global currency peers to trade at 104.723 ahead of weekly jobless claims data at 8:30 am Eastern time and PMI activity data just after the opening bell.
Heading into the start of the trading day on Wall Street, the Nasdaq is set for a record high with futures contracts suggesting a 165-point opening bell gain, powered in part by a 6.7% advance for Nvidia.
Futures contracts tied to the S&P 500 are priced for a 29-point advance while the Dow Jones Industrial Average is called 33 points higher.
More Wall Street Analysts:
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- Analysts weigh in on Google-parent Alphabet’s stock after cloud event
- Analysts revamp Disney stock price target after proxy fight
In overseas markets, Europe's Stoxx 600 was marked 0.24% higher, with tech stocks leading the advance, while Britain's FTSE 100 edged 0.02% higher in London.
Overnight in Asia, Japan's Nikkei 225 snapped a two-day losing streak with a 1.26% gain as Nvidia's blowout earnings lifted chip and tech stocks. The regionwide MSCI ex-Japan benchmark slipped 0.19% into the close of trading.
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