Dow Jones closes with plus
Computer manufacturer Dell slows down technology stocks
31.05.2024, 22:22
Listen to article
This audio version was artificially generated. More info | Send feedback
The eagerly awaited inflation data in the USA are positive. A good signal for the Fed and investors. However, when it comes to tech stocks, the outlook for Dell is spoiling the mood for many.
The US stock markets ended the week divided. On the one hand, economic data had somewhat alleviated the interest rate fears that had flared up recently and yields on the bond market had fallen. On the other hand, investors again sold many technology stocks after Dell, another industry representative, gave a pessimistic outlook and fueled doubts about the industry’s earnings prospects. The day before, Salesforce had scared investors with a disappointing forecast. Profit-taking after the sector’s good run so far this year may also have played a role.
The Dow Jones index closed 1.5 percent higher at 38,686 points, led by Salesforce, which recovered by 7.5 percent after falling by around 20 percent the day before. The S&P 500 gained 0.8 percent. The Nasdaq indices made up for losses of up to 1.7 percent in a final spurt and were barely changed at the end of trading. The NYSE saw 2,169 (Thursday: 2,130) price gainers, compared to 666 (658) losers. 40 (90) stocks ended trading unchanged.
The eagerly awaited inflation data turned out to be favorable. The price measure favored by the US Federal Reserve, the overall index for personal consumption expenditures (PCE), was 2.7 (previous month: 2.7) percent higher than a year ago. Economists had also predicted this. The Fed is aiming for an inflation rate of 2 percent. Month-on-month, the PCE price index rose by 0.3 (0.3) percent in April, which was also in line with expectations.
The market viewed it as positive that personal spending in April, at plus 0.2 percent, remained well below the estimate of plus 0.4 percent. This suggests restraint on the part of consumers, who are so important for the US economy, which provides arguments for the monetary policy dovish. This also applied to the Chicago Purchasing Managers’ Index, which fell against expectations in May and moved even further away from the expansion threshold.
This should give the market a little boost to the battered hopes of an imminent interest rate cut. In view of the persistent inflation in the USA and the robust US economy, US central bankers recently put a severe damper on the market’s interest rate cut fantasies and announced that interest rates are likely to remain at a high level for a while longer.
Dollar slightly lighter after inflation data
On the foreign exchange market, the dollar held up just after the inflation data was published. The dollar index fell by 0.1 percent.
On the bond market, yields fell again after the previous day’s losses. The yield on 10-year bonds fell by 5.1 basis points to 4.50 percent.
Oil prices continued to fall after the significant declines the day before. Traders spoke of growing nervousness ahead of the OPEC+ conference on Sunday, at which the OPEC+ conference is expected to decide on a possible extension of the current production limits. On Thursday, an unexpectedly significant increase in US gasoline stocks had put pressure on prices.
Dell with price slide – gap jumps up
Among the individual stocks, Dell fell by 17.8 percent. CFO Yvonne McGill expects some margin pressure for the current quarter, which is due both to the intensifying competition for business with large corporate customers and to an inflationary cost environment, including higher NAND and DRAM memory prices. The prospect of a shrinking gross margin in particular upset investors, as analysts at BofA Securities noted.
Meanwhile, Gap rose nearly 29 percent after first-quarter sales exceeded expectations and raised its outlook for the fiscal year.
According to the US aviation authority FAA, aircraft manufacturer Boeing (+2.8%) has developed performance targets that the authority will use to assess whether the company’s efforts to improve quality are successful. Boeing officially presented a corresponding plan on Thursday. The FAA had tightened its supervision of Boeing after a fuselage panel on a 737 Max came loose during an Alaska Airlines flight in January.
Shares of Trump Media & Technology Group fell 5.3 percent after a jury found the company founder and former US president guilty on all counts in the hush money trial against Donald Trump.
To follow the day’s events surrounding the DAX, take a look at our stock market day.