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Stock Market News for May 24, 2024

U.S. stock markets closed sharply lower on Thursday owing to profit booking. Strong economic data also dented market participants’ confidence on Fed’s decision to cut interest rate anytime soon. All three major stock indexes ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) plummeted 1.5% or 605.78 points to close at 39.065.26. This was the blue-chip index’s worst daily performance so far this year. All 30 components of the index ended in negative zone.

The major loser of the Dow was The Boeing Co. BA. The aerospace giant plunged 7.6% after the company forecast negative cash flow in 2024 due to sluggish deliveries. Boeing currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The tech-heavy Nasdaq Composite finished at 16,736.03, declining 0.4% due to weak performance by U.S. corporate behemoths. In intraday day trading, the tech-laden index recorded an all-time high of 16,996.39.

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The S&P 500 slid 0.7% % to finish at 5,267.84. In intraday trading, the benchmark posted an all-time high of 5,341.88. All 11 broad sectors of the broad-market index ended in negative territory. The Real Estate Select Sector SPDR (XLRE), the Utilities Select Sector SPDR (XLU), the Consumer Discretionary Select Sector SPDR (XLY) and the Financials Select Sector SPDR (XLF) fell 2.1%, 1.7%, 1.6% and 1.4%, respectively.   

The fear-gauge CBOE Volatility Index (VIX) was up 3.9% to 12.77. A total of 13.70 billion shares were traded on Thursday, higher than the last 20-session average of 12.19 billion. Decliners outnumbered advancers on the NYSE by a 5.13-to-1 ratio. On Nasdaq, a 3.59-to-1 ratio favored declining issues.

Economic Data

The headline S&P Global Flash US PMI Composite Output Index rose from 51.3 in April to 54.4 in May, marking its highest since April 2022. The 3.1 index point rise reflects the largest gain for 15 months. Output has risen continually for 16 consecutive months, with May witnessed acceleration after the slowdown seen in March and April. Any reading above 50 indicates expansion in output.

Flash US Services Business Activity Index rose to 54.8 in May from 51.3, marking its highest level in 12 months. Flash US Manufacturing PMI (purchasing managers’ index) came in at 50.9 in May from 50 in April, reflecting 2-month high. Flash US Manufacturing Output Index came in at 52.4 in May from 51.1 in April, reflecting 2-month high.

The Department of Labor reported that initial claims decreased 8,000 to 215,000 for the week ended May 18, lower-than the consensus estimate of 220,000. Previous week’s data was revised upward by 1,000 to 223,000. Continuing claims (those who have already received government aids and reported a week behind) increased 8,000 to 1.794 million for the week ended May 11. The previous week's level was revised downward by 8,000 from 1,794 million to 1,786 million.

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced that the new home sales in April came in at 634,000, missing the consensus estimate of 673,000. The data for March was also revised downward to 665,000 from 693,000 reported earlier.

Rate Cut Hope Reduces

The CME FedWatch tool currently shows a 53.2% probability that the Fed will reduce the benchmark lending rate by 25 basis points in September. This probability was 68% just a week ago. Probability below 60% generally indicates that the central bank will keep he fed fund rate unchanged. The interest rate derivative tool currently also assigns a mere 44% probability that the Fed will cut interest rate twice of 25 basis points in 2024.

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