Financial sector boasts about being this week's most significant.
Following the unexpected interest rate adjustment by the Fed, US stock indices reached new heights. Subsequently, there have been instances of profit-taking. The Dow ended the week slightly in the green at 42,063 points, gaining 0.1%. The S&P-500 dipped 0.2%, while the Nasdaq Composite fell 0.4%. A total of 957 stocks gained (originally 2227 on Thursday), 1835 lost (previously 593), and 63 remained unchanged.
Investors might have cashed in on their gains at the week's end, thanks to the US Federal Reserve's interest rate decrease combined with some positive economic data reported on Thursday, which propelled the Dow Jones Index and S&P-500 to records. However, the optimistic outlook for a "soft landing" of the domestic economy still appears to support the US stock market. No significant economic data was released on Friday.
Federal Reserve governor Christopher Waller backed the US central bank's decision to lower interest rates by 0.5% by 50 basis points. Waller explained their position, stating, "The economy is robust, and inflation is decreasing. We aim to preserve this balance." He highlighted the decline in inflation, which has accelerated since the spring, and is expected to be confirmed in data from August.
Takeover rumors fuels Intel's rise - FedEx falters
Intel's stock soared above 7% at one point due to takeover rumors. Sources claim that chipmaker Qualcomm (-2.9%) extended a buyout offer to Intel in recent days.
Nike is in the news with a leadership change. CEO John Donahoe is stepping down, and Elliott Hill, with nearly three decades of experience in leadership roles within Nike, will take over. Hill's return is greeted positively by the market, with Nike's stock up 6.8%. The sportswear company has recently been losing market share to new competitors like On and Hoka. Analysts debated whether Donahoe, who has a background in the tech industry and previously served at eBay, was the best fit for the top job.
Meanwhile, FedEx's stock plummeted by 15.2%. The logistics company reported a decline in revenue and profits in its first fiscal quarter and reduced its guidance. UPS decreased by 2.7%. General Motors (+0.5%) initiated a large-scale recall in the U.S. Due to a deficiency that fails to alert drivers promptly when brake fluid levels are low, the automaker is recalling nearly 450,000 vehicles from the 2023 and 2024 model years. Affected vehicles include pickup trucks and SUVs.
Constellation Energy leaped 22.3%. The energy company has reached an agreement with Microsoft (-0.8%) to reactivate the undamaged reactor block 1 at Three Mile Island near Harrisburg. Microsoft will be furnished with the electricity generated there. Three Mile Island was the location of the most serious nuclear accident in U.S. history to date in 1979, where a partial meltdown occurred in reactor block 2. Lennar surpassed market expectations with its adjusted third-quarter results. Furthermore, the homebuilder expressed optimism that the Federal Reserve's interest rate reduction would stimulate housing demand. However, its stock dropped 5.3%, having increased about 30% in the previous three months.
Dollar strengthens slightly - Oil prices decrease
The forex market saw a minor uptick in the dollar's strength. The dollar index climbed 0.1%. The yen faced significant damage, initially appearing unfazed by the Bank of Japan's (BoJ) interest rate decision. Statements from BoJ Governor Kazuo Ueda later caused the yen's weakness. "Given the rising uncertainty, we'd like to take a brief pause to assess the situation," Ueda said. His primary forecast remains a favorable outcome for the U.S., but the risks for this view have grown recently due to signs of an economic slowdown.
Oil prices softened slightly. Concerns about demand from major oil-consuming nations, including China, prompted the decrease. Prices for WTI and Brent crude slipped by up to 0.3%. On the bond market, state bonds were sold due to positive economic predictions, thereby raising yields. The yield on ten-year bonds went up by 2.5 basis points to 3.74%. Gold prices continued to rise after strong gains the day before. The Fed's interest rate decrease continued to provide support. The price of an ounce of gold increased by 1.3%.
For more on today's market activity, please see here.
Investors may have used the positive economic data and the US Federal Reserve's interest rate decrease as an opportunity to sell their profitable positions at the end of the week, contributing to a slight increase in the Dow Jones Index and S&P-500 but a decrease in the Nasdaq Composite. Hardly a week goes by without a weekly report detailing the performance of major stock indices and individual companies in the US stock market.
Despite FedEx's stock plummeting due to lower revenue and profits, the US Federal Reserve's interest rate reduction might still stimulate demand in the logistics sector, as suggested by homebuilder Lennar, whose stock dropped despite surpassing market expectations due to its optimism about the Fed's decision. These weekly reports can shed light on market trends and impact investment strategies.
