Stock market today: Stocks pull back from records after Dow touches 40,000 for first time

Published

6 months ago

May 17, 2024

US stocks could not reach new records on Thursday, despite the Dow Jones Industrial Average (^DJI) touching 40,000 for the first time ever.

The Dow finished the day down 0.1%, closing at 39,869 after briefly surpassing its new price milestone earlier in the session. The tech-heavy Nasdaq Composite (^IXIC) fell about 0.3%, while the S&P 500 (^GSPC) dropped around 0.2%. The S&P closed just below 5,300 after eclipsing that number for the first time on Wednesday.

Earlier on Thursday, three Fed officials — Cleveland Fed President Loretta Mester, New York Fed President John Williams and Richmond Fed President Thomas Barkin — warned of higher-for-longer interest rates while speaking at separate events. That commentary appeared to take the wind out of stocks’ recent rally.

“Holding our restrictive stance for longer is prudent at this point as we gain clarity about the path of inflation,” Mester said at an event in Wooster, Ohio.

Stocks rallied on Wednesday after new data showed signs of cooling inflation, which spurred bets on a Federal Reserve rate cut in September. All three major indexes closed at record highs as a result.

Investors also jumped into bonds, sending the 10-year Treasury yield (^TNX) down near one-month lows at around 4.33%. On Thursday, yields ticked about 2 basis points higher with the 10-year trading around 4.38%.

On the corporate front, Walmart (WMT) posted quarterly profits, revenue, and same-store sales that beat Wall Street estimates. Shares of the US retail giant finished the day up more than 7%.

Meanwhile, a mystery was solved as Warren Buffett’s Berkshire Hathaway (BKR-B) revealed it has taken a $6.7 billion stake in Chubb (CB). The disclosure ended months of suspense over a position kept concealed in regulatory filings. The insurer’s shares closed about 5% higher on Thursday.

Stocks pull back from records

US stocks could not reach new records on Thursday, despite the Dow Jones Industrial Average (^DJI) touching 40,000 for the first time ever.

The Dow finished the day down 0.1%, closing at 39,869 after briefly surpassing its new price milestone earlier in the session. The tech-heavy Nasdaq Composite (^IXIC) fell about 0.3% while the S&P 500 (^GSPC) dropped around 0.2%. The S&P closed just below 5,300 after eclipsing that number for the first time on Wednesday.

Disney-Fox-Warner Bros. sports streaming service reveals name: Venu Sports

The upcoming sports streaming partnership among Disney’s ESPN (DIS), Warner Bros. Discovery (WBD), and Fox (FOXA) officially has a name: Venu Sports.

The streaming service, announced in February, is set to debut sometime this fall and comes as media companies face increased pressure from investors to scale their platforms and achieve profitability.

Venu Sports will bring together the three companies’ respective slates of sports networks. Collectively, the new service encompasses about 55% of US sports rights, according to Citi Research.

“We are excited to officially introduce Venu Sports, a brand that we feel captures the spirit of an all-new streaming home where sports fans outside of the traditional pay TV eco-system can experience an incredible collection of live sports, all in one place,” Venu Sports CEO Pete Distad said in a news release on Thursday. Distad is a former Apple and Hulu executive.

According to the platform, the service will be made available directly to consumers via a new app. Subscribers will also have the ability to bundle the product with Disney+, Hulu, or Max. The companies have yet to reveal when they will release exact pricing information.

A few risks have circled the platform ahead of its launch, including antitrust regulation and the potential of Warner Bros. Discovery losing a key media rights deal with the NBA.

Stocks take breather after Dow touches $40K

US stocks took a breather in late afternoon trading on Thursday after the Dow Jones Industrial Average (^DJI) touched 40,000 for the first time ever following Wednesday’s record-setting rally.

The Dow traded near the flatline after its new price milestone. The S&P 500 (^GSPC) did the same after closing above 5,300 for the first time on Wednesday. The tech-heavy Nasdaq Composite (^IXIC) dipped around 0.1%.

The 10-year Treasury yield (^TNX) ticked up slightly to trade near 4.37% after it fell near one-month lows on Wednesday.

The moves come after after three Fed officials — Cleveland Fed president Loretta Mester, New York Fed president John Williams, and Richmond Fed president Thomas Barkin — warned of higher-for-longer interest rates while speaking at separate events earlier on Thursday.

30-year mortgage rate dips for second consecutive week

Long-term mortgage rates fell for the second week in a row, mortgage buyer Freddie Mac said on Thursday.

The average 30-year rate fell to 7.02% from 7.09% last week amid signs of easing inflation.

On Wednesday, data from the Bureau of Labor Statistics showed US consumer price increases cooled during the month of April — a welcome sign for investors hoping for interest rate cuts this year.

“Given the news that inflation eased slightly, the 10-year Treasury yield dipped, leading to lower mortgage rates,” Freddie Mac said. “The decrease in rates, albeit small, may provide a bit more wiggle room in the budgets of prospective homebuyers.”

Mortgage rates are still considerably higher compared to the year-ago period when the 30-year rate averaged 6.39%. As a result, the housing market remains in recovery mode with construction for single-family and multifamily homes still down year over year, according to the Census Bureau.

GameStop stock tanks 25% as meme sell-off continues
GameStop stock (GME) fell as much as 25% Thursday as the meme rally continues to fizzle. Shares of the video game retailer slid about 18% in the prior session after gaining more than 180% over a two-day span earlier this week.
Shares of theater chain AMC (AMC) also fell 14% Thursday in a continuation of Wednesday’s sell-off.
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Heavily shorted stocks were part of a monster rally that lasted Monday and Tuesday after the re-emergence of Keith Gill, also known as “Roaring Kitty,” whose bull case on GameStop ignited a meme stock rally back in 2021.
Housing stocks slide after data shows April housing starts fell from prior year
Housing stocks slid Wednesday morning on the heels of fresh government data signaling a weak recovery in new residential construction.
The SPDR S&P Homebuilders ETF (XHB) was down 1% while D.R. Horton, Inc. (DHI), the biggest US homebuilder, fell by nearly 2%, and Lennar (LEN) and Toll Brothers (TOL) dragged by 2% during morning trading.
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Construction for single-family and multifamily homes modestly rebounded in April from the prior month but was down year over year and was lower than anticipated, as rising mortgage rates dampened housing activity.
Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1.36 million, up 5.7% from March’s revised rate but down 0.6% from the year-earlier period, according to data from the Census Bureau released Thursday. Economists surveyed by Bloomberg were expecting a 1.42 million rate.
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“The recovery wasn’t as strong as we had anticipated, which potentially casts some doubt on our above-consensus forecast for homebuilding,” Thomas Ryan, an economist at Capital Economics, wrote in a note following the release.
This comes as homebuilders aren’t feeling too confident about the housing market as mortgage rates have stayed above 7%. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) fell to 45 in May, down six points from April’s figure, marking the first decline since November 2023. Any number under 50 indicates that more builders view conditions as poor rather than good.
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Despite the bleak expectations from builders, Ryan anticipates that single-family starts could climb to 1.11 million this year “as homebuilders capitalize on the lack of second-hand homes on the market, which has shifted demand to newbuilds.”
However, some of that strength could be offset by weaker movement in multifamily starts, potentially leaving total housing starts at 1.43 million by the end of the year, Ryan said.
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Dow touches 40,000 level for first time
The Dow Jones Industrial Average (^DJI) touched the 40,000 level Thursday for the first time following a record-setting rally in the prior session.
The blue-chip index gained more than 80 points while the S&P 500 (^GSPC) also rose after closing above 5,300 for the first time on Wednesday. The tech-heavy Nasdaq Composite (IXIC) inched higher.
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The gains come amid increasing expectations that the Federal Reserve will cut rates in September following the latest Consumer Price Index print which showed signs of cooling inflation.
Bitcoin hovers at $66,000 level
Bitcoin (BTC-USD) extended gains Thursday to hover around $66,000.
The token gained more than 7% on Wednesday following a cooler-than-expected inflation print.
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Investors anticipate the Federal Reserve will go ahead with rate cuts this year.
Just off-air with Walmart’s CFO
I just got off the Yahoo Finance set following a post-earnings chat with Walmart (WMT) CFO John David Rainey.
A couple of quick takeaways:
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Rainey told us he sees deflation in certain product categories, not just disinflation.
Sales in May are off to a solid start.
Investors are seeing the benefits of investments in same-day delivery and buy-online, pick-up-in-store technology.
Yahoo Finance’s data master, Jared Blikre just flagged that Walmart has crossed the $500 billion market cap level.
Stocks regroup near record highs as Dow eyes 40,000 level
US stocks were little changed at the market open Thursday after a record-setting rally in the prior session.
The S&P 500 (^GSPC) opened near the flatline after closing above 5,300 for the first time on Wednesday. The Dow Jones Industrial Average (^DJI) and the tech-heavy Nasdaq Composite (IXIC) were also little changed.
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All three major gauges ended Wednesday at all-time highs, leaving the Dow less than 100 points short of surpassing 40,000.
Cooling inflation data released on Wednesday spurred bets for a Federal Reserve rate cut in September.
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Meanwhile, Walmart (WMT) posted better-than-expected earnings. The retail giant attracted more higher-income customers, and e-commerce sales jumped for its flagship Walmart stores and Sam’s Club.
Freakishly strong quarter out of Walmart
This quarter out of Walmart (WMT) is a monster!
I had sell-side coverage on the company for a decade, but I have never seen a performance like this before — aat a time in which consumers and businesses are still feeling the bite of inflation.
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A few rapid-fire highlights ahead of my interview with Walmart’s CFO John David Rainey, which is airing around 9:15 a.m. ET on Yahoo Finance:
Gross profit margins are up in all segments. Impressive.
E-commerce sales by division: Walmart US +22%; International +19%; Sam’s Club +18%.
Full-year guidance was raised, but it feels conservative after this quarter..
The never-ending AI talk
I was driving into work today and caught an interview with the CEO of an overseas company that just reported earnings. The CEO got two questions in a row on artificial intelligence.
It sounded like they barely knew what AI was and hadn’t visited the R&D department in a while. But therein lies the problem with this crop of AI: Most leaders of public companies don’t truly understand it at all. And that’s a risk to investors.
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Despite the lack of deep knowledge on the topic, that isn’t stopping CEOs from blowing hot air on AI on earnings calls! Goldman Sachs pointed out today in a new note that 41% of S&P 500 companies have mentioned AI on first quarter earnings calls, up from 23% a year ago.