Shares fell on Thursday, even though Nvidia’s strong earnings forecast helped lift the stock, overshadowed by economic data that showed inflation remains a concern.
The Dow Jones Industrial Average fell 605.78 points, or 1.5%, to 39,065.26, its worst day in 2024. The S&P 500 fell 0.7% and the Nasdaq fell 0.4%.
Nvidia shares soared 9% to surpass the $1,000 per share mark, trading on the Nasdaq in early trading after the AI chip company forecast better-than-expected quarterly revenue and announced a stock split. It helped push the S&P 500 to an intraday high.
But despite the acceleration in business activity, stocks lost steam after economic data for May showed rising price pressures in the United States and a drop in weekly jobless claims signaled strength in the labor market.
“This may speak to the fact that people are now in a position where they’re expecting disappointing growth numbers, slowing inflation numbers and rate cuts,” said Brian Nick, senior investment strategist at the Macro Institute in New York. “And this morning … it caught people off guard.”
“Anything that looks like good news is still being perceived as bad news. This suggests that the market is largely happy that interest rates have stopped rising and that the Fed’s reassurance-driven upswing is still continuing, but the worst thing at this point is that interest rates would continue to rise.”
This month’s rise in stock prices to record highs was fueled in part by optimism about AI, a strong earnings season and renewed expectations for the Fed to cut interest rates this year. Nvidia stock is up about 11% this year after soaring about 240% in 2023.
According to the CME, the market is now pricing in a 52.2% probability of at least a 25 basis points (bps) rate cut in September, down from nearly 67% a week ago. FedWatch Tools.
The Dow Jones Industrial Average fell, partly due to a more than 7% drop in Boeing stock after the company forecast negative free cash flow in 2024 due to weak deliveries.
DuPont announced plans to split into three publicly traded companies. The company’s shares rose 0.5%, down sharply from their previous highs.
Shares of Ticketmaster’s parent company, Live Nation, fell nearly 8% after the U.S. Department of Justice and a group of 30 states and the District of Columbia filed a lawsuit on Thursday seeking to break up the concert promoter.
