US markets have experienced significant losses over the past few days, with the Dow falling over 1,000 points in just three days. The negative momentum continued on Thursday, with the Dow down by 386 points in mid-morning trading. The S&P 500 and Nasdaq Composite also dropped, with lackluster earnings results from Salesforce causing concern among investors. Shares of Salesforce fell 20% after reporting a revenue miss and lowering expectations for the year ahead. Wednesday saw all 11 sectors of the S&P 500 closing lower, driven mainly by a decrease in shares of chipmaking giant Nvidia.
The recent downturn in the market is being fueled by factors such as disappointing earnings and stronger-than-expected economic data. Concerns about inflation have caused bonds to take a hit, with the 10-year Treasury yield reaching its highest level since late April after a weak Treasury auction on Wednesday. Robust economic data has also spooked investors, who fear that signs of a stronger economy could lead the Federal Reserve to maintain higher interest rates for longer in an effort to combat inflation. This week’s market performance has been a sharp contrast to the previous weeks, which saw the S&P 500 finishing higher for 23 out of the last 30 weeks.
The momentum in the market has turned negative, with analysts recognizing the challenges of maintaining the previous gains. New economic data released on Thursday revealed that US GDP for the first quarter was revised lower to 1.3% from 1.6%, indicating a slowdown in economic expansion. Personal consumption is also slowing, which analysts view as a double-edged sword – it could be a concern for companies and stock market investors, but it could also lead to a reduction in inflation and allow the Fed to lower interest rates. All eyes are now on the release of the Personal Consumption Expenditures index for April on Friday, which is the Fed’s preferred inflation gauge.
Overall, the current market conditions are turbulent, with uncertainty surrounding various economic indicators and the potential impact on inflation. Investors are closely monitoring developments in the market, particularly in response to economic data releases and corporate earnings reports. The upcoming days will be critical in determining the direction of the market, as investors assess the implications of recent trends and economic indicators. The situation remains fluid, and it is important for investors to stay informed and vigilant in navigating the current market environment.
