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U.S. stock markets fell sharply on Thursday after a choppy session. Wall Street mayhem continued as market participants remained highly concerned about the time of the first reduction of the benchmark interest rate by the Fed. Moreover, recent spike in crude oil prices also added to inflation woes. All three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) plummeted 1.4% to close at 38,596.98 after a choppy session. Notably, 25 components of the 30-stock index ended in negative territory and 5 ended in positive zone. The blue-chip index was up nearly 300 points at its intraday high. The index posted negative closing in the first four trading day of second-quarter 2024 and worst single-day performance since March 2023.
The tech-heavy Nasdaq Composite finished at 16,049.08, sliding 1.4% due to weak performance by U.S bigwigs. The major loser of the tech-laden index was Advanced Micro Devices Inc. (AMD - Free Report) . The stock price of the semiconductor behemoth plunged 8.3%. Advanced Micro Devices currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 tumbled 1.2% to finish at 5,147.21. The benchmark posted its biggest daily percentage drop since Feb 13. All 11 broad sectors of the broad-market index ended in negative territory. The Technology Select Sector SPDR (XLK), the Health Care Select Sector SPDR (XLV), the Consumer Discretionary Select Sector SPDR (XLY) and the Communication Services Select Sector SPDR (XLC) declined 1.6%, 1.4%, 1.2% and 1.3%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 14.1% to 16.35, marking its highest close since Nov 1. A total of 11.03 billion shares were traded on Wednesday, lower than the last 20-session average of 11.76 billion. Advancers outnumbered decliners on the NYSE by a 1.66-to-1 ratio. On Nasdaq, a 1.25-to-1 ratio favored advancing issues.
Concerns Regarding Fed’s Rate Cut
On Apr 3, in a speech at Stanford University, Fed Chairman Jerome Powell reiterated that the central bank will start reducing the Fed fund rate at some point of time this year. However, he also cautioned that the time of rate cut will depend on upcoming economic data, especially the inflation data.
On Apr 1, Regional Fed Presidents Mary Daly of San Francisco and Loretta Mester of Cleveland both said they anticipate rate cuts this year. However, they do not expect monetary easing policies to be implemented anytime soon.
Meanwhile, two key Fed officials - Governor Christopher Waller and Atlanta President Raphael Bostic - have said that they will prefer less than three rate cuts of 25 basis points each in 2024. On Apr 3, Atlanta Fed President Raphael Bostic expressed concerns about slow pace of decline in inflation rate and anticipated only one rate cut of 25 basis points this year that to on fourth-quarter.
On Apr 4, Minneapolis Fed President Neel Kashkari said he suggested two rate cuts in 2024. However, if inflation remains sticky, he may not favor even a single rate cut. Richmond Fed President Thomas Barkin said the Fed has "time for the clouds to clear" on inflation before starting to cut rates.
Spike in Crude Oil Prices
The price of the U.S. benchmark - West Texas Intermediate crude for May delivery advanced 1.36% to settle at $86.59 a barrel. The global benchmark – Brent crude for June delivery appreciated 1.45% to $90.65 a barrel. Both benchmarks recorded their highest settlement price since Oct 20.
Recent spike in crude oil prices is primarily owing to an escalation of geopolitical conflict between Israel and Iran. Higher crude oil price will increase transportation costs thereby raising the general price level to add to more problems to sticky U.S. inflation rate.
Economic Data
The Department of Labor reported that initial claims increased by 9,000 to 221,000 for the week ended Mar 30, higher-than the consensus estimate of 213,000. Previous week’s data was revised upward from 210,000 to 212,000. Continuing claims (those who have already received government aids and reported a week behind) decreased 19,000 to 1.791 million for the week ended Mar 23. The U.S. trade deficits for goods and services in February came in at $68.9 billion, higher than the consensus estimate of $67.7 billion. January’s data was revised marginally higher to a deficit of $67.6 billion from $67.4 billion reported earlier.
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Stock Market News for Apr 5, 2024
U.S. stock markets fell sharply on Thursday after a choppy session. Wall Street mayhem continued as market participants remained highly concerned about the time of the first reduction of the benchmark interest rate by the Fed. Moreover, recent spike in crude oil prices also added to inflation woes. All three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) plummeted 1.4% to close at 38,596.98 after a choppy session. Notably, 25 components of the 30-stock index ended in negative territory and 5 ended in positive zone. The blue-chip index was up nearly 300 points at its intraday high. The index posted negative closing in the first four trading day of second-quarter 2024 and worst single-day performance since March 2023.
The tech-heavy Nasdaq Composite finished at 16,049.08, sliding 1.4% due to weak performance by U.S bigwigs. The major loser of the tech-laden index was Advanced Micro Devices Inc. (AMD - Free Report) . The stock price of the semiconductor behemoth plunged 8.3%. Advanced Micro Devices currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 tumbled 1.2% to finish at 5,147.21. The benchmark posted its biggest daily percentage drop since Feb 13. All 11 broad sectors of the broad-market index ended in negative territory. The Technology Select Sector SPDR (XLK), the Health Care Select Sector SPDR (XLV), the Consumer Discretionary Select Sector SPDR (XLY) and the Communication Services Select Sector SPDR (XLC) declined 1.6%, 1.4%, 1.2% and 1.3%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 14.1% to 16.35, marking its highest close since Nov 1. A total of 11.03 billion shares were traded on Wednesday, lower than the last 20-session average of 11.76 billion. Advancers outnumbered decliners on the NYSE by a 1.66-to-1 ratio. On Nasdaq, a 1.25-to-1 ratio favored advancing issues.
Concerns Regarding Fed’s Rate Cut
On Apr 3, in a speech at Stanford University, Fed Chairman Jerome Powell reiterated that the central bank will start reducing the Fed fund rate at some point of time this year. However, he also cautioned that the time of rate cut will depend on upcoming economic data, especially the inflation data.
On Apr 1, Regional Fed Presidents Mary Daly of San Francisco and Loretta Mester of Cleveland both said they anticipate rate cuts this year. However, they do not expect monetary easing policies to be implemented anytime soon.
Meanwhile, two key Fed officials - Governor Christopher Waller and Atlanta President Raphael Bostic - have said that they will prefer less than three rate cuts of 25 basis points each in 2024. On Apr 3, Atlanta Fed President Raphael Bostic expressed concerns about slow pace of decline in inflation rate and anticipated only one rate cut of 25 basis points this year that to on fourth-quarter.
On Apr 4, Minneapolis Fed President Neel Kashkari said he suggested two rate cuts in 2024. However, if inflation remains sticky, he may not favor even a single rate cut. Richmond Fed President Thomas Barkin said the Fed has "time for the clouds to clear" on inflation before starting to cut rates.
Spike in Crude Oil Prices
The price of the U.S. benchmark - West Texas Intermediate crude for May delivery advanced 1.36% to settle at $86.59 a barrel. The global benchmark – Brent crude for June delivery appreciated 1.45% to $90.65 a barrel. Both benchmarks recorded their highest settlement price since Oct 20.
Recent spike in crude oil prices is primarily owing to an escalation of geopolitical conflict between Israel and Iran. Higher crude oil price will increase transportation costs thereby raising the general price level to add to more problems to sticky U.S. inflation rate.
Economic Data
The Department of Labor reported that initial claims increased by 9,000 to 221,000 for the week ended Mar 30, higher-than the consensus estimate of 213,000. Previous week’s data was revised upward from 210,000 to 212,000. Continuing claims (those who have already received government aids and reported a week behind) decreased 19,000 to 1.791 million for the week ended Mar 23.
The U.S. trade deficits for goods and services in February came in at $68.9 billion, higher than the consensus estimate of $67.7 billion. January’s data was revised marginally higher to a deficit of $67.6 billion from $67.4 billion reported earlier.