The stock market edged lower on Thursday after a robust rally in the previous session pushed the Nasdaq Composite above 20,000 points for the first time. Investors digested mixed corporate earnings, disappointing economic data, and expectations of a Federal Reserve interest rate cut next week.
Market Overview
As of midday trading:
S&P 500: Down 0.1%
Dow Jones Industrial Average: Down 0.1%
Nasdaq Composite: Down 0.2%
Wednesday’s rally was fueled by gains in technology stocks, but Thursday saw a mixed performance in the sector. Apple (AAPL), Microsoft (MSFT), and Meta (META) posted modest gains, while Nvidia (NVDA), Alphabet (GOOGL), Amazon (AMZN), and Tesla (TSLA) lost ground.
Earnings Spotlight
Adobe (ADBE)
Adobe led the day's decliners, plunging 13% after issuing a weak revenue outlook. Despite exceeding analysts’ expectations for the quarter, the company’s forecast raised concerns about slowing growth.
Broadcom (AVGO)
Broadcom shares fell nearly 3% ahead of its quarterly earnings release, as investors awaited insights into the chipmaker’s performance amid a challenging semiconductor market.
Warner Bros. Discovery (WBD)
On a positive note, Warner Bros. Discovery surged 15% following the announcement of a restructuring plan aimed at improving profitability.
Economic Data and Federal Reserve Expectations
Investors closely monitored economic reports on Thursday morning:
Producer Price Index (PPI): Wholesale inflation exceeded expectations, raising concerns about lingering price pressures.
Jobless Claims: Weekly claims were higher than anticipated, indicating potential softness in the labor market.
Despite the disappointing data, consumer price figures released on Wednesday aligned with economists' estimates, bolstering expectations of a Federal Reserve rate cut. The CME Group's FedWatch Tool indicated a 98% probability of a quarter-point rate reduction at next week’s policy meeting.
The yield on 10-year Treasurys ticked up slightly to 4.30%, reflecting cautious optimism about future rate adjustments.
Commodity Markets
Bitcoin: Little changed at approximately $101,700.
Gold Futures: Fell nearly 2% to $2,705 an ounce, signaling reduced demand for safe-haven assets.
Crude Oil Futures: Declined slightly as investors assessed supply and demand dynamics.
Looking Ahead
As markets recalibrate from recent highs, attention will turn to upcoming corporate earnings and the Federal Reserve's policy decision next week. While the expected rate cut has been priced in, any surprises from the Fed or economic data could sway investor sentiment.
Market participants should remain cautious as volatility persists in both equities and commodities.