- US stocks climb after flat start
- Roblox drops 22% on weak guidance
- Jobs data paves way for 2024 rate cut
4:09pm: Fall rate cut eyed
The three major US stock indexes finished Thursday’s trading day higher as additional data showing the cooling of the US labor market revived hopes of an interest rate cut in the fall.
The Dow Jones added 0.9% or 331 points at 39,388 points, marking the seventh consecutive day of gains for the index.
The S&P 500 broke back above 5,200 points, up 0.5% at 5,214 and the Nasdaq was up 0.3% at 16,346 points.
Roblox finished the day 22% lower after the video game platform issued weak guidance and warned players were spending less.
Duolingo also booked an 18% drop in its shares on a slowdown in user growth despite its Q1 financial results coming in ahead of estimates.
2.30pm: Sideways action?
The Dow Jones has continued to chug higher, up 0.7% to 39,318, but the other two major indexes levelled off, with the S&P 500 staying up 0.3% and the Nasdaq Composite rising 0.2%.
Market analyst Fawad Razaqzada at City Index said stocks were rising as cooling US labor market data was boosting rate cut bets.
"US stocks, gold and bonds all rose as the dollar fell after the latest jobless claims data provided fresh evidence of a cooling US labor market, helping to support the view that the Federal Reserve is going to cut rates by around September."
"Until new inflation data is released next week to help gauge when there might be a shift towards lower interest rates, don’t be surprised to see some side-ways action in major indices like the Nasdaq."
A few Federal Reserve officials have spoken this week, suggesting that interest rates may need to remain at these high levels for a longer period than previously anticipated, but Razaqzada said the lack of any major bearish catalysts "could keep the downside limited".
Weaker macro releases in the past week have helped to boost the odds of a Fed interest rate cut by September to around 70% from 58% before.
Although today's earnings were not the best from Arm and AirBnB, it has been a pretty good season for corporate America.
So far, 78% of the 424 S&P 500 companies that have reported their results beating analysts' expectations. Typically, this rate is around 67%.
12pm: Stocks moving higher as dollar falls
After a flat start, New York's major stock indexes moved higher as the morning wore on, with the Dow Jones the most prominent as it rose 0.5% to consolidate gains after recapturing the 39,000 level yesterday.
Caterpillar, Home Depot and Goldman Sachs were the top trio on the DJIA leaderboard.
The S&P 500 rose 0.3% and the Nasdaq Composite 0.2%, with the largest stocks mixed, as Nvidia and Tesla continue to retreat, but Microsoft, Apple and Amazon were in the green.
Top riser was Equinix Inc (NASDAQ:EQIX), up 11% as the digital infrastructure company reported modest growth for the quarter.
Biggest fallers on the S&P were EPAM Systems, a digital transformation specialist, which fell 22% after giving forward guidance for profit and revenue below analysts' expectations, hurt by weaker demand for software services.
Airbnb was down 6.7% after its guidance disappointed too.
9.37am: US stocks boosted by unemployment data
Wall Street has begun trading relatively flat after new jobs data gave investors confidence that the Federal Reserve will cut interest rates later this year.
All three of the main indexes remained flat, with the Nasdaq at 16,310, the S&P 500 at 5,189 and the Dow Jones at 39,022.
Weekly jobless claims rose to their highest level in nearly a year, pushing bond yields higher, indicating that the US may cut borrowing rates in 2024.
Initial claims rose by 22,000 to 231,000 in the week to May 4, representing the highest level since August last year.
Initial #unemployment claims jump to 8-month high this past week
???? 231K new jobless claims
???? 212K forecasted claims
⏮️ 209K previous claims (revised up)https://t.co/rf1oXRzA4B pic.twitter.com/M7XDdB7E54
— Jennifer Nash (@jennifer_nash12) May 9, 2024
Analysts had initially forecast a small jump to around 210,000.
US jobless claims grew 22k to 231k last week. The inured unemployment rate was unchanged at 1.2%. Continued claims grew 17k to 1.785 mil.
Last week's initial claims total is up 2.7% YoY and the highest since Aug 2023.#ui #unemployment (US Dept of Labor) https://t.co/eT6a6xoJwA pic.twitter.com/OxuNerGF2H
— MTS Insights (@MTSInsights) May 9, 2024
8.36am: Wall Street to open lower
US stocks are scheduled to open lower after a batch of companies reported disappointing earnings.
Dow Jones futures dropped around 92 points, implying an open of around 39,095, while the S&P 500 is expected to drop around 10 points to 5,202.
Meanwhile, the tech-heavy Nasdaq is positioned to open 32 points lower at 18,150.
Pushing Wall Street lower were more disappointing earnings, such as those from Warner Bros Discovery (NASDAQ:WBD), which dropped 4% in premarket trading after reporting both profit and revenue misses in its first quarter.
Semiconductor group Arm Holdings (NASDAQ:ARM) dropped over 6% after investors were left underwhelmed by forward guidance.
Arm expects earnings to stay flat in the current quarter, with a full-year forecast set between $1.45 and $1.65.
Weak guidance also sent Airbnb (NASDAQ:ABNB) shares 8% after disappointing second-quarter guidance overshadowed a strong first-quarter report.
The alternative accommodation provider projected second-quarter revenue in the range of $2.68 billion to $2.74 billion, below the $2.76 billion expected by Wall Street analysts.