Dow reaches milestone of 40,000 points by the weekend.
On Wall Street, there's a decrease in the push towards new record highs. However, the Dow Jones managed to maintain its 40,000-point mark reached the day before, moving into the weekend. Financial analysts have issued warnings to investors against being overly optimistic about interest rate reductions.
After yesterday's record-breaking rally, Wall Street is now advancing in three-step increments. The Dow Jones index surpassed the 40,000 mark for the first time yesterday before profit-taking broke the momentum. At the end of the week, there was no significant motivation to push the market higher—the reporting season has nearly finished, and the leading indicators index for April didn't provide a clear economic overview. Still, it was enough for a minor gain.
The Dow Jones index increased by 0.3%, closing at 40,004 points. The S&P 500 grew by 0.1%, while the Nasdaq Composite dropped by 0.1%. There were 1508 winners (compared to Thursday's 1271) and 1278 losers (1526) on the NYSE. A total of 97 stocks remained unchanged. After recent rumours of upcoming and market-assisting rate cuts prompted by a mix of weak shopping data and favorable price costs, this perspective has been slightly dampened. Bank of America experts, Claudio Irigoyen and Antonio Gabriel, warned investors against excessive interest rate optimism, stating that the market might be disappointed if they expect 50 basis points of cut this year.
Bond market reflects indecision
This sentiment was reflected on the bond market, where yields rose for the second consecutive day. Once again, doubts grew about the depth and timing of these anticipated cuts.
The dollar did not maintain its upward trend from the previous day. The dollar index stood still and retreated from daily highs. UBS reported that the dollar might weaken in the medium term. "Although the dollar could be supported in the short term due to potential interest rate cuts from the European Central Bank and the Bank of England before the US Federal Reserve, we anticipate a moderate dollar depreciation as growth outside the US improves," they said.
Crude oil prices increased after the recent gains. Oil's positive outlook was supported by two consecutive weekly decreases in US crude inventories, according to ANZ analysts. Severe storms with major power outages in southeastern Texas and parts of Louisiana might lead to refined products disruptions, Again Capital said, further contributing to the oil price rise.
The price of gold rose above $2,400 per troy ounce, marking a 1.7% increase. Previously, gold experienced growth this week on the back of anticipated interest rate cuts from the US Federal Reserve. Once the rate cutting cycle commences in late 2022, gold may witness increased demand from ETF investors, according to Ole Hansen, Head of Commodity Strategy at Saxo Bank.
Boeing holds tight to leadership
Boeing shareholders re-elected outgoing CEO Dave Calhoun and the board members. They also approved the compensation packages for Boeing executives. Calhoun is retiring as CEO at the end of the year due to quality issues. Proxy advisor Glass Lewis suggested Calhoun and two other directors shouldn't be re-elected. The shares increased by 1.1%.
In the semiconductor industry, Advanced Micro Devices (+1.1%) received a boost after announcing that Microsoft will offer AI chips from AMD to its Azure cloud platform customers. Shares in Applied Materials fell 0.9%, as the semiconductor producer reported a slight increase in sales in the second quarter of the fiscal year and expected sales to increase further in the current period. Traders attributed this drop to market profit-taking.
Shares in Reddit leaped by 10%, as the company allowed AI startup OpenAI access to its data through a licensing agreement. OpenAI had previously signed identical deals with Google and Cision.
The IT services company DXC Technology (-17%) deterred investors with its weak business performance and pessimistic outlook. In contrast, Doximity (+18.1%) saw a rise due to positive business figures and a share buyback announcement. Finally, Cracker Barrel (-14.4%) fell significantly after the restaurant chain drastically reduced its quarterly dividend.
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In light of the cautious stance from financial analysts, the Federal Reserve might need to reconsider its interest rate policy to avoid disappointing market expectations. Despite the Dow Jones maintaining its 40,000-point mark, there's a growing sense of uncertainty on Wall Street, with some investors questioning the depth and timing of potential rate cuts.
Source: www.ntv.de
