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Mixed stocks with focus on inflation data
U.S. stocks were mixed in early trading Tuesday, with the technology sector serving as a bright spot as Wall Street kicked off a holiday-shortened week by focusing on an upcoming inflation report closely watched by the Fed. Reserve.
The benchmark S&P 500 index (^GSPC) embraced the flat line, while the Nasdaq Composite (^IXIC) added about 0.5% after solid closing gains on Friday. The Dow Jones industrial average (^DJI)which lists fewer technology names, fell about 0.3%.
Major gauges are regrouping after a volatile week as traders return from the Memorial Day holiday. Stocks were hit back and forth by two impulses: fading optimism about rate cuts, on the one hand, and high hopes for AI, on the other. The latter is led by Nvidia (NVDA), whose shares continued their post-earnings slide, gaining about 5%.
Investors are now firmly back to inflation surveillance, counting down until the release of the Federal Reserve’s preferred PCE indicator on Friday. Fed officials have sent out a series of warnings that data must show a real cooling in inflation to trigger a policy change, with Neel Kashkari, the latest to join them.
See more information: How does the job market affect inflation?
These comments, next economic prints hotter than expected It is Fed hawkish minutesled traders to once again reduce bets about interest rate cuts this year. Data hunters will get updates on Q1 GDP and consumer confidence later this week, which could be a catalyst.
On other individual engines, GameStop (GME) actions rose up to 22% on Tuesday. The gaming retailer said Friday that it raised not far from $1 billion by selling shares during the meme rally in early May. Meanwhile, Apple (AAPL) rose after data showing iPhone sales in China jumped more than 50% in April when retail partners reduced prices.
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- Tuesday, May 28, 2024 at 5:45 pm GMT+2
Nvidia shares surpass $1,100 for the first time
Nvidia (NVDA) shares traded above $1,100 for the first time on Tuesday.
The landmark moment comes as shares rose about 5% after Elon Musk’s artificial intelligence startup xAI raised $6 billion in a Series B funding round, the company announced in a statement. blog post. The financing brings xAI’s valuation to $24 billion.
Increasing competition in AI has continued to drive Nvidia’s growth rate as the chipmaker continues its record recovery.
Last week, Nvidia reported first quarter results this impressed Wall Street. The company also announced a 10-for-1 stock split and a dividend increase.
GameStop Shares Rise After Nearly $1 Billion Stock Sale Completes
GameStop (GME) shares rose as much as 22% on Tuesday, with shares opening around $23. The moves come after the video game retailer said it raised nearly $1 billion with its latest stock offering.
While shares are still well below the nearly $65 level reached earlier this month during a short-lived meme manifestationThe stock’s action reflects investors’ exuberance toward meme trading.
Yahoo Finance’s Ines Ferré reports:
“If this were a normal market, people would be a little scared,” Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance.
He added: “You don’t sell shares in the market if you think they are undervalued. You do this when you think your stocks are overvalued.”
GameStop is a heavily shorted stock, with short interest just over 21% of the float.
The company took advantage of the unexpected rally in memes in mid-May, selling 45 million shares and raising about $933 million, according to a Friday statement.
GameStop said it intends to use the net proceeds for general corporate purposes, which could include acquisitions and investments.
The offering was first announced on May 17 together with the company preliminary financial resultscausing the stock to plummet up to 30% that day.
O offer was seen as a smart move by some Wall Street analysts amid the video game retailer’s financial difficulties. GameStop’s quarterly sales fell sharply from the same period a year ago, according to its most recent earnings report.
San Diego Sees Biggest Home Price Gains
How house prices reached a new historical record in March, some cities remained more susceptible to rising costs.
Regionally, San Diego continued to report the largest annual gain among the top 20 cities, rising 11.1% in March. New York and Cleveland also increased by 9.2% and 8.8%, respectively.
High mortgage rates, high home prices and limited housing stock have challenged homebuyers. In March, mortgage rates hovered around average range of 6%. Last week, they fell below 7% for the first time since the beginning of April.
Despite the pent-up demand for houses, low stock continues to be a problem, which has not allowed house prices to fall. But this dynamic is expected to change.
“While we expect mortgage rates to fall in the coming years, we also expect inventories to gradually normalize, which should help cool the market,” wrote Thomas Ryan, U.S. economist at Capital Economics, in a note to clients following the release. . Ryan and his team expect home prices to rise 3% in 2025 and 2.5% in 2026.
House prices hit new records, data shows
The seasonally adjusted S&P CoreLogic Case-Shiller national home price index (HPI) rose 0.3% month over month in March and jumped 6.5% year over year – the second strongest annual gain since late 2022, it said Oxford Economics in a note to clients following the release of the data.
“We expect house price growth to remain positive in the coming quarters, with risks tilted to the upside,” wrote Oxford Economics chief economist Bernard Yaros. “Short supply in the resale market, a robust job market and pent-up demand from aging Millennials in their early years of household formation argue for potentially firmer home price gains than in our baseline forecast.”
According to the data, prices in the 20 largest U.S. metro areas reached another all-time high in March.
(Source: Oxford Economics/Haver Analytics)
Yaros added that while he expects “mortgage rate declines as the first rate cut by the Federal Reserve becomes visible,” prices are expected to remain elevated amid a “historically tight” supply of homes for sale.
Meanwhile, the seasonally adjusted Federal Housing Finance Agency (FHFA) House Price Index also rose during March, but at a slower pace compared to previous months. The index rose just 0.1% after rising 1.2% month-on-month in February.
“Although base effects have started to become less favorable for the FHFA index, it is still increasing on an annual basis faster than it has for most of 2023,” Yaros said.
Consumer confidence recovers for the first time in 3 months
Consumer confidence unexpectedly increased in May.
The Conference Board’s latest index reading was 102, up from 97.5 in April and higher than expected by the 96 economists surveyed by Bloomberg. The May reading ended three months of decline in the index.
“Consumers’ assessment of current business conditions was slightly less positive than last month,” Conference Board Chief Economist Dana Peterson said in the release. “However, the strong labor market continued to reinforce consumers’ overall assessment of the current situation. Opinions about current labor market conditions improved in May as fewer respondents said jobs were ‘hard to get’ ‘.”
Peterson added: “Fewer consumers expected deterioration in future business conditions, job availability and income, resulting in an increase in the Expectation Index.”
Dow falls, Nasdaq rises at opening
US stocks opened mixed on Tuesday, with technology serving as a bright spot ahead of a critical inflation report due later this week.
The benchmark S&P 500 index (^GSPC) rose about 0.2%, while the Nasdaq Composite (^IXIC) added about 0.4% after solid closing gains on Friday. The Dow Jones industrial average (^DJI) was the biggest laggard of the morning, falling 0.3%.
Foot Locker is not out of the woods
Foot cabinet (Florida) has had a horrible 12 months.
Poor financial performances have led to surprisingly weak prospects, causing shares to fall 16% last year.
The Street is bracing for another terrible quarter for the sneaker and sportswear retailer when it reports Thursday morning.
Evercore ISI analyst Michael Binetti said investors should expect a “very difficult quarter.” The company may alert again for the entire year.
He pointed out several reasons:
“In addition to pressure from low-income consumers, we believe major product releases like the Air Max DN have underperformed, and the recent Jordan 4 Industrial Blue is selling below MSRP in the resale channel ($ 185 vs $215 MSRP).”
Evercore ISI’s Take on Trump 2.0 Tariffs
We started to see Wall Street crunch the numbers on the economic impact of the new tariffs that former President Trump would be interested in implementing if he won a second term.
Today Evercore ISI weighs in with its opinion:
“Presidents rarely enact or implement the entirety of any one campaign idea, and Trump, in particular, likes to use bold ideas as a launchpad. However, it is critical to understand what dramatic starting point Trump has presented, as this has implications for where he could, Ultimately, coming down to face value, the combination of the proposed 10% across-the-board tariff and China’s 60% tariff would lead to an overall U.S. weighted average tariff rate of nearly 17%, the highest since the 1930s. It was Hawley. On a static basis (that is, without assuming any dynamic economic effects), tariffs would increase from 0.3% of GDP to 1.9% of GDP – an increase of more than $400 billion annually. by commercial partners.”
Are markets underestimating a new Trump trade war? (EvercoreISI)
