The stock market experienced a significant downturn today, with the Dow Jones Industrial Average suffering its worst session of 2024, despite Nvidia’s impressive earnings performance. The Dow tumbled as broader market weakness overshadowed the tech giant’s success. Both the S&P 500 and the Nasdaq Composite also saw declines, despite reaching record highs earlier in the session. Investors’ hopes for a market lift from Nvidia’s strong results were dashed as economic data fuelled concerns over the Federal Reserve’s interest rate plans, causing a ripple effect of caution and uncertainty across global markets.

Key Takeaways:

  • Dow Suffers Worst Day of 2024: The Dow Jones Industrial Average plunged 605.78 points, or 1.53%, to close at 39,065.26. This marked the Dow’s worst session of the year, driven by widespread declines across all 30 stocks, with Boeing leading the losses, falling 7.6%. Every company in the Dow traded down, indicating market weakness.
  • Nvidia Shines Amid Market Decline: Nvidia’s stock surged 9.3%, reaching over $1,000 per share, following stronger-than-expected fiscal first-quarter results and a 10-for-1 stock split announcement. The company reported fiscal second-quarter revenue guidance of approximately $28 billion, surpassing the forecast of $26.61 billion.
  • S&P 500 and Nasdaq See Declines: The S&P 500 fell 0.74%, closing at 5,267.84, while the Nasdaq Composite dropped 0.39% to end at 16,736.03. Despite earlier record highs, more than 400 names in the S&P 500 turned negative, highlighting a lack of market breadth.
  • Economic Data Diminishes Rate Cut Hopes: Stronger-than-expected economic data, including services and manufacturing figures, reduced the likelihood of a Federal Reserve rate cut in September. Initial jobless claims for the week ending May 18 came in at 215,000, below the forecast of 220,000, causing traders to price in just a 51% chance of a rate cut, down from 58% a day ago.
  • European Markets Slightly Higher: The pan-European Stoxx 600 index closed 0.06% higher, with technology stocks rising 1.08% following Nvidia’s earnings. However, the FTSE 100 Index fell by 31.10 points, or 0.37%, to 8,339.23, led by a 11% drop in National Grid after announcing a £7 billion equity raise.
  • Mixed Performance in Asia: Japan’s Nikkei 225 climbed 1.26% to close at 39,103.22, while Hong Kong’s Hang Seng index led regional losses, dropping 1.77%. The CSI 300 index also declined 1.16% to 3,641.79. The Kospi edged 0.06% lower to 2,721.81, and the Australian S&P/ASX 200 fell 0.46% to 7,811.80.
  • Treasury Yields Rise: The 10-year Treasury yield increased by 4 basis points to 4.479%, and the 2-year yield rose nearly 6 basis points to 4.935%, following positive economic data. The services activity index recorded a reading of 54.8, and manufacturing was at 50.9, both exceeding expectations.
  • Oil Prices Decline: US crude oil prices fell sharply, with WTI dropping to $76.50, its lowest in over a week, after peaking at $78.50. This marks the fourth consecutive day of decline for US crude oil. The bearish trend pushed US crude oil down 2.55% for the day, and Brent crude also fell, settling at $80.20, down 2.4% from its previous close.

FX Today:

  • EUR/USD Tests Key Moving Averages: The EUR/USD pair fell 0.2% to $1.0805, nearing the 200-day Simple Moving Average (SMA) at $1.0790. Earlier in the session, the pair rose to a high of $1.0861 following positive economic data from the euro zone. On the downside, a break below the 200-day SMA may prompt a revisit to the May low of $1.0649, followed by the 2024 bottom of $1.0601. Resistance levels are projected at $1.0894, the March top of $1.0981, and the critical $1.1000 mark.
  • GBP/USD Approaches Support Levels: The GBP/USD pair slipped 0.2% to $1.2690, moving below the rising 100-hour Moving Average (MA). The pair tested a swing level near $1.2686, which has been a significant floor over the past week. A move below this level could lead traders to target the rising 200-hour MA at $1.2668, with further support between $1.2632 and $1.2640. On the upside, resistance is seen at recent highs around $1.2750.
  • USD/JPY Aims for Higher Ground: USD/JPY edged up 0.03% to 156.86, maintaining its uptrend. The pair is targeting the psychological resistance at 157.00, having cleared the May 14 high of 156.76. Beyond 157.00, the next resistance levels are at 158.44 and the year-to-date high of 160.32. On the downside, key support lies at 156.05, followed by 155.61 and 155.18.
  • USD/CAD Extends Gains: The USD/CAD pair broke above the 1.3700 handle, reaching a two-week high, as the Greenback outpaced the softening Canadian Dollar. The pair has been on a bullish streak, closing higher in four of the last five sessions. It remains well above the 200-day Exponential Moving Average (EMA) at 1.3550, but still down from its mid-April high near 1.2850.
  • GBP/JPY Maintains Stronghold: GBP/JPY declined to 199.20 but continues to hold an overall positive outlook. The pair is approaching near-cycle highs, with support at the 20-day SMA at 196.00 indicating potential corrective movements. The last price was 199.17, with a daily fall of 0.22 or 0.11%. 
  • Gold Prices Decline: Gold prices fell for the third straight day, settling at $2,332, down from a recent high of $2,383. The precious metal faced significant downward pressure due to strong US economic data and rising Treasury yields. Support levels to watch are the May 13 low at $2,332 and the May 8 low at $2,303, while resistance is seen at $2,350 and $2,400. Further strength could see gold retest the year-to-date high at $2,450.

Market Movers:

  • Live Nation Entertainment (LYV) Falls on Antitrust Concerns: Live Nation Entertainment’s shares plummeted more than 8%, leading the S&P 500 losers, after Bloomberg reported that the US Justice Department and several states are planning to sue the company for antitrust violations related to Ticketmaster’s control of concert ticket sales.
  • Boeing (BA) Drops on Cash Burn Warning: Boeing shares dropped 7.6%, making it the biggest loser in the Dow Jones Industrial Average, following CFO’s comments that Q2 cash burn could be as severe or worse than Q1’s nearly $4 billion.
  • GlobalFoundries (GFS) Slumps After Share Sale Announcement: GlobalFoundries saw its stock fall more than 8% after Mubadala Technology Investments offered $950 million worth of shares through Morgan Stanley and Bank of America Securities, creating significant selling pressure.
  • E.l.f. Beauty (ELF) Surges on Strong Earnings: E.l.f. Beauty’s stock surged 18.7% after reporting fiscal fourth-quarter earnings of 53 cents per share on revenues of $321.1 million, significantly beating analysts’ expectations of 32 cents per share on revenues of $292.6 million.
  • Medtronic Plc (MDT) Declines on Flat Margin Outlook: Medtronic shares fell more than 5% after executives announced during an earnings call that they expect gross margins to remain flat year-over-year for fiscal 2025, citing currency pressures.
  • Monro (MNRO) Drops on Disappointing Sales: Monro’s stock declined more than 11% following a Q4 report that showed comparable sales rose only 0.1%, missing the consensus estimate of 2.23%.
  • LiveRamp (RAMP) Climbs on Strong Earnings: Shares of LiveRamp climbed 6% after posting stronger-than-expected fiscal fourth-quarter earnings and providing robust revenue guidance for the current quarter and full year.
  • Snowflake (SNOW) Dips Despite Revenue Beat: Snowflake’s shares dipped 5.4%, reversing earlier gains, as initial optimism from better-than-expected first-quarter revenue of $829 million, which surpassed the consensus forecast of $786 million, was dampened by adjusted earnings falling short at 14 cents per share, missing expectations by 4 cents.
  • Nvidia (NVDA) Soars on Robust Q1 Results: Nvidia shares soared more than 9%, leading gains in the S&P 500 and Nasdaq 100, after reporting Q1 revenue of $26 billion, surpassing the consensus of $24.69 billion, and projecting Q2 revenue of $28 billion, plus or minus 2%, exceeding expectations.
  • Dell Technologies (DELL) Rises on Analyst Upgrade: Dell Technologies’ stock rose more than 4% after Evercore ISI added the stock to its tactical outperform list, setting a price target of $165, reflecting strong future prospects and positive sentiment.
  • Titan Machinery (TITN) Tumbles on Weak Earnings: Shares of Titan Machinery tumbled 14.7% following first-quarter earnings and revenue results that fell short of expectations, according to FactSet consensus estimates.
  • Triumph Group (TGI) Slides on Weak Guidance: The aerospace stock slid 11.6% after Triumph Group provided earnings guidance of 42 cents per share for the full year ending March 2025, significantly below the FactSet consensus estimate of 70 cents per share.
  • Cytokinetics (CYTK) Plunges on Stock Offering: Cytokinetics’ stock plunged 17.3% following the announcement of a $500 million common stock offering, raising investor concerns over potential dilution and the company’s future financial health.

As markets dealt with Nvidia’s impressive earnings contrasted against broader economic concerns, the sharp declines in the Dow Jones and other major indices highlighted investor fear. The Dow’s 605.78-point drop, marking its worst day of 2024, underscored the market’s sensitivity to mixed signals from economic data and Federal Reserve rate cut expectations. While Nvidia’s surge showcased continued enthusiasm for AI-driven growth, it was not enough to counteract the widespread market downturn. As traders reassess their positions amidst robust economic data and fluctuating rate cut probabilities, the market’s path forward remains uncertain.