U.S. stocks are drifting Thursday as Wall Street’s momentum cools following its latest record-setting day. The S&P 500 was edging down by 0.1% in morning trading a day after leaping to set an all-time high for the 25th time this year. The Dow Jones Industrial Average was up 176 points, or 0.5%, and the Nasdaq composite was down 0.3% a day after hitting its own record.
Quick Read
- Wall Street’s Momentum Cools: After hitting a record high, the S&P 500 edged down by 0.1% on Thursday, while the Nasdaq composite fell by 0.3%, and the Dow Jones Industrial Average rose by 0.5%, as U.S. stocks drifted lower.
- Retailers Report Losses: Big Lots and Five Below saw significant stock declines of 19.5% and 12.3%, respectively, after reporting larger-than-expected losses and disappointing sales due to reduced consumer spending.
- Economic Signals: A rise in unemployment benefit applications and weaker-than-expected productivity gains hinted at a potential softening in the job market, which Wall Street hopes could lead to lower inflation and potential interest rate cuts by the Federal Reserve.
- Strong Performers: Lululemon Athletica and J.M. Smucker saw stock increases of 3.1% and 5.4%, respectively, after reporting better-than-expected profits.
- Robinhood Acquisition: Robinhood Markets’ stock rose 1% following its announcement to buy cryptocurrency exchange Bitstamp, pending regulatory approvals.
- Nvidia’s Valuation: Nvidia’s stock slipped 2.2% despite recent enthusiasm for AI technology, reversing gains after the company reached a $3 trillion valuation.
- Global Markets: European stock indexes rose modestly following the European Central Bank’s interest rate cut, while Asian markets were mixed with Tokyo up 0.6% and Shanghai down 0.5%.
The Associated Press has the story:
Wall Street’s momentum cools after its latest record-setting day
Newslooks- NEW YORK (AP) —
U.S. stocks are drifting Thursday as Wall Street’s momentum cools following its latest record-setting day. The S&P 500 was edging down by 0.1% in morning trading a day after leaping to set an all-time high for the 25th time this year. The Dow Jones Industrial Average was up 176 points, or 0.5%, and the Nasdaq composite was down 0.3% a day after hitting its own record.
Big Lots tumbled 19.5% after reporting a larger loss for the latest quarter than expected. The retailer said it missed targets for sales because its customers are continuing to pull back on their spending, particularly for things that aren’t essentials.
Another retailer, Five Below, gave more discouraging comments about how its customers are doing. Its profit and revenue last quarter fell short of analysts’ expectations, and CEO Joel Anderson said struggles for the company’s core lower-income customers dragged on results, even as it saw strong growth from its higher-income customers. Five Below’s stock fell 12.3%.
Many retailers and other companies have been highlighting a split between their customers making lower and higher incomes. Inflation is particularly hurting those at the lower end, who are struggling to keep up with a cost of living that’s still rising, even if not as fast as before. That threatens to crack a linchpin that’s kept the U.S. economy out of a recession despite high interest rates: strong spending by U.S. households.
Another factor that’s helped U.S. consumer spending stay so strong has been a remarkably solid job market. But a report on Thursday showed some potential softening there as well.
More U.S. workers applied for unemployment benefits last week than the week before, when economists were expecting to see a slight decline. The numbers are still low compared with history, but they could suggest some slowing in the job market.
Wall Street is actually hoping for just such a slowdown. That’s because a cooldown can drive inflation lower and convince the Federal Reserve to deliver the cuts to interest rates that traders desire so much. The danger is if the slowdown for the economy overshoots and turns into a recession, which would ultimately hurt stock prices.
In a potentially discouraging signal for markets, a separate report on Thursday said the productivity of U.S. workers wasn’t quite as strong in the first three months of the year as economists thought. That’s key because strong productivity gains could allow wages for U.S. workers to keep rising without adding as much upward pressure on inflation.
After the economic reports, Treasury yields were holding relatively steady. The yield on the 10-year Treasury rose to 4.29% from 4.28% late Wednesday.
The two-year yield, which moves more on expectations for Fed action, was holding steady at 4.73%.
On Wall Street, Lululemon Athletica climbed 3.1% after reporting better profit for the latest quarter than analysts expected, in large part because of strong growth in sales outside the Americas. J.M. Smucker rose 5.4% after the company behind Uncrustables and Jif peanut butter likewise topped profit expectations.
Robinhood Markets rose 1% after saying it agreed to buy Bitstamp, a cryptocurrency exchange. Robinhood said the deal, which still needs regulatory approvals, will bring in customers from around the world, including the European Union and Asia.
Nvidia reversed an early gain and slipped 2.2% a day after becoming the third company to see its total value top $3 trillion. The chip company has been riding a tidal wave of enthusiasm for artificial-intelligence technology.
The week’s big event will arrive on Friday, when the U.S. government offers the latest monthly update on the job market. Economists expect it to show slight accelerations in hiring and average hourly wage gains from the month before.
As of now, virtually no one expects the Federal Reserve to make any move on interest rates at its meeting next week. But the hope is still for the Fed to cut its main interest rate at least once this year, down from its highest level in more than two decades.
The European Central Bank on Thursday became the latest in the world to cut its own interest rates. The bank’s president, Christine Lagarde, said inflation there had eased enough to begin lower rates but declined to say how the future path lower would look.
Stock indexes rose modestly in Europe following the widely expected decision. They were mixed in Asia, with indexes up 0.6% in Tokyo, down 0.5% in Shanghai and closed for trading because of a holiday in Seoul.
