Stocks took a hit on Thursday, with the Dow Jones Industrial Average experiencing its worst day of the year in 2024. Despite a post-earnings surge in NVIDIA, the overall market failed to see a significant lift. The Dow Jones, consisting of 30 stocks, dropped by 605.78 points, or 1.53%, marking its most significant decline of the year. Boeing was the top loser within the Dow, falling by 7.5%. The S&P 500 and Nasdaq Composite also saw declines of 0.74% and 0.39%, respectively, after reaching all-time highs earlier in the day.
NVIDIA, a chipmaker and AI favorite, saw a 9.3% increase in its stock price, surpassing $1,000 per share following the release of better-than-expected fiscal first-quarter results and the announcement of a 10 for 1 stock split. The company’s fiscal second-quarter revenue guidance of around $28 billion exceeded analyst expectations, signaling continued growth momentum. Analysts anticipate earnings of $5.95 per share.
Wall Street has closely monitored NVIDIA’s performance as a barometer for the AI sector’s vitality. With a market capitalization surpassing $2.5 trillion, NVIDIA’s influence extends to the broader market, including the S&P 500. Despite NVIDIA’s positive showing, the majority of stocks in the S&P 500 turned negative on Thursday, underscoring a lack of market breadth. Information technology emerged as the sole sector to see gains on the day.
Thursday’s market rally faltered in the face of better-than-expected economic data, which diminished expectations of a rate cut by the Federal Reserve in September. Strong May services and manufacturing data exceeded economists’ projections, as per U.S. purchasing managers’ reports from S&P Global. Robust labor market data further heightened concerns that the Fed would not lower interest rates in the near future.
Traders are now assessing a diminished 51% probability of a rate cut at the Fed’s September meeting, down from 58% the day before and nearly 68% a week prior, based on the CME FedWatch Tool. When the likelihood drops below 60%, a rate adjustment by the Fed is deemed less probable.
Piper Sandler’s chief market technician Craig Johnson noted the market’s tenuous footing, citing a combination of sector leadership, weakness in transportation stocks, and tepid amplitude readings. This assessment has raised doubts about sustainable upward movement from current levels, raising caution among investors.
In conclusion, the stock market experienced significant declines on Thursday, with the Dow Jones Industrial Average suffering its worst day of the year, despite a surge in NVIDIA stock following positive earnings reports. The broader market exhibited limited breadth, as most stocks in the S&P 500 trended downwards. Improved economic data dampened hopes of a Fed rate cut, leading to diminished expectations among traders and investors. Market experts remain cautious about the market’s stability and the potential for sustained growth in the near future.
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https://www.nbcnews.com/business/markets/dow-slides-500-points-sp-500-retreats-record-nasdaq-hits-new-heights-rcna153781