US stocks ended mixed on Thursday after all three indexes set new intraday records on optimism about interest rates and corporate earnings. Oil prices also rose as investors bet the Federal Reserve would soon cut interest rates.
At its session high, the Dow Jones Industrial Average hit 40,051.05, a continuation of the bull market that began in October 2022. The 30-member blue-chip index had approached 40,000 earlier this year, before retreating in April under pressure from concerns about higher interest rates for longer. The uptrend resumed in May, helped by strong corporate earnings and some U.S. economic data that bolstered the case for the Fed to start cutting rates this year.
The Dow Jones Industrial Average closed up 38.62 points, or 0.1%, at 39,869.38. The S&P 500 closed down 0.21%, at 5,297.1. The Nasdaq Composite dropped 0.26%, to 16,698.32. The S&P 500 also set a new intraday record during the session, after closing above 5,300 for the first time in history on Wednesday. The Nasdaq also hit a new intraday high on Thursday before closing in the red.
The Dow is up nearly 61 percent year-to-date, while the Nasdaq and S&P 500 are up 111 percent each. “This rally is a statement of the strength of capital, innovation, earnings growth and economic resilience. Recent technical momentum and strong fundamentals, including a positive outlook for earnings and interest rates, mean the market has room to run higher in the near term,” John Lynch, chief investment officer at Comerica Wealth Management, told Reuters.
The main catalyst that pushed the Dow Jones Industrial Average above 40,000 points in the session was a nearly 7% surge in Walmart shares. The world's largest retailer just announced much better-than-expected first-quarter 2024 results, and as of this session, the company's stock is up 21% year-to-date. The market has been driven by expectations of interest rate cuts and optimism about artificial intelligence (AI). Investors are betting on the possibility of the Fed starting to cut interest rates at its September monetary policy meeting, according to data from the CME's FedWatch Tool.
Those expectations were boosted after data released on Wednesday showed the consumer price index (CPI) rose less than expected in April. On Thursday, the US Labor Department released a weekly report showing that initial jobless claims rose slightly last week from the previous week - another sign of labor market weakness that could further bolster the case for a Fed rate cut. Technology stocks have been leading the market rally this year. Large-cap tech stocks such as Amazon, Meta and Nvidia have all risen sharply, with Amazon up 20%.
Other big-name stocks that have outperformed this year include American Express, up about $291.3 billion, and Goldman Sachs, up about $201.3 billion. Both stocks have benefited from investors betting that the U.S. economy will avoid recession and that consumers will continue to spend.
Baird analyst Ross Mayfield believes the market's uptrend will continue. "The rally has all the hallmarks of a cyclical bull market. We think the rally is not over yet," Mayfield told CNBC. Brent crude futures in London rose $0.52 a barrel, or 61 cents, to settle at $83.27 a barrel. West Texas Intermediate crude futures in New York rose $0.60 a barrel, or 81 cents, to settle at $79.23 a barrel. Despite the decline in geopolitical risk premiums in the Middle East, oil prices have been supported in recent sessions by expectations that the Fed will cut interest rates in September.
Oil prices were boosted Thursday by the U.S. initial jobless claims data, said John Kilduff of Again Capital. “Although initial jobless claims were relatively low, the report was weak enough for the Fed to move forward with rate cuts. On the other hand, the labor market is still strong enough to stimulate gasoline demand,” Kilduff said.
However, investors in the oil market are still cautious as gasoline demand in the US has remained below 9 million barrels per day for 6 consecutive weeks, below the annual average. Concerns about weakening oil demand in the US and the easing of tensions in the Middle East are partly responsible for Brent crude oil prices falling 5.21 TP3T since the beginning of the month and WTI crude oil prices falling 31 TP3T. However, since the beginning of the year, the prices of the two types of oil have increased 81 TP3T and 10.61 TP3T, respectively.
Source: VnEconomy
