Stocks finished lower Thursday, after the Dow Jones Industrial Average briefly topped 40,000 for the first time and one day after the three major indexes closed at record highs.
The Dow Jones Industrial Average closed down 38 points, or 0.10%, to finished at 39,869.38, after reaching a high of 40,051.
The S&P 500 slipped 0.21% to 5,297.10, while the tech-heavy Nasdaq lost 0.26% to end at 16,698.32.
Walmart led the Dow as the world's biggest retailer surged nearly 7% after posting stronger-than-expected first-quarter earnings and stating that full-year profit could top its forecasts.
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said “breaking the 40,000 barrier is a big psychological boost for the bulls as round numbers hold special significance in people’s hearts and minds.”
"We are in a bull market and people are showing some irrational exuberance (meme stocks) and dismissing bad news (slowing retail sales) and focusing on good news (slightly slowing inflation)," he said.
Zaccarelli added that no one knows how overvalued a market may become except in hindsight, "but markets are now headed into overvalued territory so it’s prudent to dollar cost average and be more discerning when investing in equities and we wouldn’t just buy the whole index at this point (avoid passive)."
Updated at 12:21 PM EDT
Higher for longer
Cleveland Fed President Loretta Mester told an event Wooster, Ohio, Thursday that she needs more evidence that inflation is returning to target before she can support a Fed rate cut.
“I expect progress on inflation over time, but at a slower pace than we saw last year,” she said, adding that "“I now believe that it will take longer to reach our 2% goal than I previously thought.”
Cle. Fed. Pres. #LorettaMester says holding a restrictive policy stance for longer is prudent during speech to @WayneCountyEDC. Mester says monetary policy is in a good place to manage risks. https://t.co/oSwqalAkyG
— ClevelandFed (@ClevelandFed) May 16, 2024
Updated at 10:38 AM EDT
Dow 40,000
The Dow Jones Industrial Average breached the 40,000 point mark for the first time on record, while also setting an all-time best for the time it took to rise 10,000 points.
The Dow passed the 30,000 point mark on November 24, 2020, or 1,269 days ago. That's just inside the 1,442 days the Average took to climb from 20,000 points, which it hit on December 13, 2016.
BREAKING: The Dow Jones Industrial Average has hit 40,000 for the first time in history. pic.twitter.com/v6dlXRKR4q
— The Kobeissi Letter (@KobeissiLetter) May 16, 2024
Updated at 9:42 AM EDT
More soft data
The S&P 500 added 6 points, or 0.11%, in the opening minutes of trading, while the Dow gained 9 points and the Nasdaq nudged 23 points, or 0.14%, from last night's close, following a largely bearish set of economic data releases prior to the start of trading.
Today’s numbers were in line with the overall theme of the week—nothing dramatic, but showing signs of a steady-to-cooling economy," said Chris Larkin, managing director for trading and investing at E*Trade from Morgan Stanley.
"Jobless claims were in line with estimates, but the two-week total is as high as it’s been since last September, housing starts slowed, and the Philly Fed manufacturing index came in below expectations," he added. "Overall, nothing that would push the Fed back into an overly-hawkish stance."
S&P 500 Opening Bell Heatmap (May 16, 2024)$SPY +0.08% 🟩$QQQ -0.04% 🟥$DJI +0.08% 🟩$IWM -0.12% 🟥 pic.twitter.com/0sVTZ5K9jG
— Wall St Engine (@wallstengine) May 16, 2024
Updated at 9:19 AM EDT
More soft data
Industrial production for the month of April was flat to the previous month, the Commerce Department report, coming in shy of the Street's 0.1% forecast. Manufacturing activity, the report noted, fell 0.3% while overall capacity utilization, a good indicator of demand, eased to 76.9% from 77.2%.
Stocks slipped lower following the data release, but have been paring gains for much of the premarket session, with the S&P 500 called 3 points lower into the opening bell.
US Industrial Production (M/M) Apr: 0.0% (est 0.1%; prev R 0.1%)
— LiveSquawk (@LiveSquawk) May 16, 2024
- Capacity Utilisation: 78.4% (est 78.4%; prev R 78.5%)
- Manufacturing (SIC) Production: -0.3% (est 0.1%; prev R 0.2%)
Updated at 8:39 AM EDT
Data dump
Jobless claims slipped to 222,000 last week, the Labor Department reported, a tally that was higher than the 220,000 forecast but lower than the prior period's (revised) 232,000 tally.
Housing starts for the month of April, meanwhile, jumped 5.7% from March, but the overall annual pace of 1.36 million unit was far shy of the Street's 1.42 million forecast.
The Philadelphia Fed's May survey of business conditions in the mid-Atlantic region was also shy of forecasts, falling to 4.5 points from the 15.5 reading in April.
Stocks were little-changed after the triple data release, with futures tied to the S&P 500 suggesting a 5 point gain and those linked to the Dow indicating a 32 point advance.
Benchmark 10-year notes held at 4.332% while 2-year notes were pegged at 4.753%.
🇺🇸 *US APRIL HOUSING STARTS 1.360M; EST. 1.421M - BBG
— Christophe Barraud🛢🐳 (@C_Barraud) May 16, 2024
*US APRIL HOUSING STARTS RISE 5.7% M/M; EST. +7.6%
*US APRIL BUILDING PERMITS 1.440M; EST. 1.480M
*US APRIL BUILDING PERMITS FALL 3.0% M/M; EST. +0.9%
Updated at 7:18 AM EDT
Walmart surge
Walmart shares are set to open at a record following a stronger-than-expected first-quarter earnings report, which included a near 4% increase in same-store sales and a modest nudge higher in its full-year profit forecast.
Looking into the current financial year, Walmart sees earnings at the higher end of, or slightly above, its prior $2.23 to $2.37 per share forecast, with net sales rising between 3% and 4%.
Walmart shares were marked 4.6% higher in premarket trading immediately following the earnings release to indicate an opening bell price of $62.60 each.
$WMT US: "Sales reflected strength in transaction counts and unit volumes; like-for-like inflation slightly positive" pic.twitter.com/sXoXZZg2NO
— The Transcript (@TheTranscript_) May 16, 2024
Stock Market Today
Stocks soared to records yesterday after the Commerce Department showed headline inflation slowed to 3.4% last month, with the closely tracked core rate easing to 3.6%, as price pressures eased for the first time this year.
A weaker-than-expected reading for April retail sales added to hopes that the economy, while still showing firm resilience, is cooling in a way that will bring tamer inflation while avoiding recession.
The Atlanta Fed's GDPNow forecasting tool, in fact, suggests a current-quarter growth rate of 3.8%, more than double the pace set over the first three months of the year. The update included the retail sales decline.
Traders are now pricing in a 72% chance of a September rate cut, according to CME Group's FedWatch, and the U.S. dollar index is trading at a one-month low of around 104.384 against a basket of its global peers.
Benchmark 10-year Treasury note yields, meanwhile, were marked 2 basis points lower in overnight trading at 4.336% while 2-year notes eased to 7.736%.
On Wall Street, investors are likely to focus on today's release of weekly jobless claims data, which is expected to show another 220,000 Americans filed new unemployment benefit applications. Also in focus: April housing starts figures. Both reports are due at 8:30 a.m. Eastern time.
No fewer than five Fed officials are slated to make public comments today, as well, including the Atlanta Fed's Rapahel Bostic, Cleveland Fed President Loretta Mester and Richmond Fed President Thomas Barkin.
Retail giant Walmart (WMT) will also publish its first-quarter earnings update prior to the opening bell.
Related: Top analyst updates S&P 500 price target after April inflation surprise
Stocks on the move include Deere & Co (DE) , which slumped 6% after the industrial equipment maker lowered its 2024 profit forecast following a mixed set of second quarter earnings.
Cisco Systems (CSCO) , meanwhile, jumped 4.5%. The network equipment maker boosted its current-quarter revenue forecast after a stronger-than-expected third-quarter earnings report after the close of trading Wednesday.
Chubb (CB) surged 9.5% after a Securities and Exchange Commission filing from Berkshire Hathaway (BRK.B) showed billionaire investor Warren Buffett built a $6.7 billion stake in the insurance group last quarter.
Heading into the start of the trading day, futures tied to the S&P 500, which is now up 12% for the year, are indicating a 6 point opening bell gain while those linked to the Dow Jones Industrial Average suggest a 46 point advance.
The tech-focused Nasdaq, which notched a 1.4% gain yesterday on the back of sliding Treasury yields and big upside moves for Nvidia (NVDA) , is priced for a 30 point bump.
More Wall Street Analysts:
- Analyst unveils new Nike price target ahead of big summer for sports
- Analysts weigh in on Google-parent Alphabet’s stock after cloud event
- Analysts revamp Disney stock price target after proxy fight
World stocks are also on pace for their longest winning streak since July, with the MSCI World index back at an all-time high of 3,475.51 points following last night's rally on Wall Street.
Europe's Stoxx 600, however, was marked 0.16% lower in early Frankfurt trading as investors took profits from recent record highs, while Britain's FTSE 100 slipped 0.29% in London.
Overnight in Asia, Japan's Nikkei 225 jumped 1.39% to close at 38,920.26 points, the highest in more than a month, while the region-wide MSCI ex-Japan benchmark rose 1.49% into the close of trading.
Related: Single Best Trade: Wall Street veteran picks Palantir stock
