News
Dow eyes 40,000 as faith in rate cuts lifts US futures
US stocks were taking a breather after a record rally as signs of cooling inflation continued to stimulate bets on a Federal Reserve rate cut in September.
S&P 500 Futures (ES=F) were nearly flat shortly after closing above 5,300 for the first time. Contracts on the Dow Jones Industrial Average (YM=F) and the tech-heavy Nasdaq 100 (QN=F) were also little changed.
Stock gains accelerated as belief grows that the US economy is headed for a soft landing. All three major indicators ended Wednesday at all-time highs, leaving the Dow less than 100 points away from surpassing 40,000.
After three consecutive hot impressions, April’s tepid consumer inflation reading spreading relief across a market bracing for higher interest rates for longer. Traders’ bets on a Fed rate cut in September have risen to more than 70%, according to the CME FedWatch Toolamid growing speculation about easing as early as July.
See more information: How does the job market affect inflation?
Investors also flocked to bonds, sending the 10-year Treasury yield (^ TNX) fell close to one-month lows of around 4.33%.
On the corporate front, Walmart (WMT) quarterly profit released, revenue and same-store sales surpassed Wall Street estimates. Shares of the U.S. retail giant rose more than 5% as it raised its full-year forecasts.
Meanwhile, a mystery was solved when Warren Buffett’s Berkshire Hathaway (BKR-B) revealed acquired a stake worth US$6.7 billion in Chubb (CB). The disclosure ended months of suspense over a position kept hidden in regulatory documents. The insurer’s shares rose about 8%.
Live updates2
- Thu May 16, 2024 at 1:22 pm GMT+2
Walmart’s Strangely Strong Quarter
This quarter from Walmart (WMT) is a monster!
I’ve covered the sell-side of the company for a decade, but I’ve never seen performance like this before – back-to-back, at a time when consumers and businesses are still feeling the impact of inflation.
Some quick highlights before my interview with Walmart CFO John David Rainey around 9:15am ET on Yahoo Finance Live:
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Gross profit margins increase across all segments. Impressive
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E-commerce sales by division: Walmart US +22%; International +19%; Sam’s Club +18%
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Full-year guidance was raised but looks conservative after this quarter.
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The never-ending talk about AI
I was driving to work today and watched an interview with the CEO of a foreign company that just reported earnings. They were asked two questions in a row about AI.
It seemed like they barely knew what AI was and hadn’t visited the R&D department in a while. But therein lies the problem with this AI culture: most public company leaders don’t truly understand it. And that is a risk for investors.
Despite the lack of in-depth knowledge on the subject, this doesn’t stop CEOs from talking about AI on earnings calls! Goldman Sachs highlighted today in a new note that 41% of S&P 500 companies mentioned AI in Q1 earnings calls, up from 23% a year ago.
Just look at the rise in conversations around AI below.
Earnings calls have become AI calls. (Goldman Sachs)
