Small plus after rally
Dow saves 40,000 point record into the weekend
May 17, 2024, 10:59 p.m
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There is no momentum for further records on Wall Street. But the Dow will certainly bring the 40,000 point record it reached the day before into the weekend. Meanwhile, analysts are warning investors against excessive interest rate optimism.
After the previous day’s record hunt, Wall Street has resumed its rally, albeit only in small steps. The Dow Jones Index closed above the 40,000 point mark for the first time in the evening. Late the previous day, the market had entered into a consolidation in order to process the new record levels. The Dow Jones index had surpassed the 40,000 point mark for the first time before profit-taking set in and set the market back. At the end of the week, there was no stimulus to drive the market up more significantly – the reporting season is largely over, and from a macroeconomic point of view, the index of leading indicators for April did not provide a clear economic picture. But it was still enough for a small plus.
The Dow Jones Index gained 0.3 percent to 40,004 points S&P 500 climbed by 0.1 percent and the Nasdaq Composite fell by 0.1 percent. There were 1508 (Thursday: 1271) price winners and 1278 (1526) losers on the Nyse. 97 (79) titles closed unchanged. The recent and market-supporting interest rate cut fantasies triggered by a combination of weak retail data and favorable consumer prices had recently been put on hold again, as Fed representatives Loretta Mester and Thomas Barkin had both signaled that US interest rates would remain high for a longer period of time. “With markets now pricing in nearly 50 basis points of cuts this year, they are likely to be disappointed,” Bank of America analysts Claudio Irigoyen and Antonio Gabriel warned against excessive interest rate optimism.
Yields are rising again
This assessment was already evident Bond market, where yields rose for the second day in a row. Here too, doubts grew about the extent and timing of the interest rate cuts.
The dollar did not continue its upward movement from the previous day Dollar index stagnated and came back from the daily highs. The US dollar is likely to weaken in the medium term, UBS speculated. “While the dollar could be supported in the near term as the European Central Bank and Bank of England are likely to begin cutting rates before the US Federal Reserve, we expect the dollar to weaken moderately as growth outside the US improves,” it said the experts.
The Oil prices continued to rise after the recent surcharges. Bullish sentiment for oil was further supported by the second consecutive weekly decline in US crude inventories, ANZ analysts said. Severe storms with massive power outages in southeast Texas and parts of Louisiana are likely to lead to supply shortages for refined products, Again Capital said, citing increased oil prices.
The Gold price rose above the $2,400 mark per troy ounce – a daily premium of 1.7 percent. The precious metal had already risen over the course of the week with renewed hopes of interest rate cuts by the US Federal Reserve. Once the interest rate cutting cycle begins later this year, gold will likely see renewed demand from ETF investors, said Ole Hansen, head of commodity strategy at Saxo Bank.
Boeing with controversial continuity
The Boeing shareholders have re-elected outgoing CEO Dave Calhoun and the aircraft manufacturer’s other board members to the board. They also approved the pay packages for Boeing executives. Calhoun will step down as CEO at the end of the year because of the quality problems. Proxy counsel Glass Lewis had recommended that Calhoun and two other directors not be re-elected. The price rose by 1.1 percent.
In the semiconductor sector received Advanced Micro Devices (up 1.1%) buoyed by the headline that Microsoft will offer AMD AI chips to customers using its Azure cloud platform. The papers from Applied Materials turned 0.9 percent into the red. The semiconductor supplier recorded a slight increase in sales in the second quarter of the financial year and forecast a further increase in sales for the current period. Traders spoke of profit-taking in a recently declining semiconductor market.
The shares of Reddit shot up by 10 percent. Reddit grants the AI startup OpenAI access to their data as part of a license agreement. OpenAI had previously reached similar agreements with Google and Cision. The IT service company DXC Technology (minus 17%) was frightening with weak business figures and a pessimistic outlook. Doximity In contrast, the online platform for medical technology supplies jumped up by 18.1 percent, with positive business figures and a share buyback. Cracker Barrel Meanwhile, prices fell 14.4 percent after the restaurant chain drastically cut its quarterly dividend.