The Dow Jones Industrial Average has experienced a decrease of over 1,000 points in the past three days.
Markets opened with a downward trend on Thursday, as the Dow dropped 0.9% (367 points). The S&P 500 and Nasdaq Composite both lost 0.2%. Investor worries heightened after Salesforce's (CRM) lackluster earnings report led to a 18% decrease in the customer relationship management giant's shares.
Salesforce's disappointing revenue and outlook for the year ahead left investors concerned. The previous day, all eleven sectors of the S&P 500 experienced losses, with the Dow slumping more than 300 points due to Nvidia's (NVDA) slip.
This week has seen a multitude of factors fueling market downturns, including earnings and stronger-than-expected economic data. The selling of bonds caused particular distress with inflation worries and a weak Treasury auction from Wednesday. The 10-year Treasury yield reached its highest level since April-end.
The Fed's fear of inflation, along with robust economic data, has investor anxiety rising. The S&P 500 has been on an impressive run for 23 of the last 30 weeks, drawing comparisons to 1989, but is now projected to have a negative week.
Deutsche Bank analysts voiced concerns on the current downward momentum, stating, "It's clear that the momentum is now more negative."
Thursday's updated economic data revealed that US gross domestic product in the initial quarter was reduced to 1.3% (from 1.6%), and personal consumption has been slowing down. This suggests that the economy is cooling off, which some analysts view as having both advantages and disadvantages.
Chris Zaccarelli, Chief Investment Officer at Independent Advisor Alliance, echoed similar sentiments. Slowing consumption and economic growth could "be a concern for companies and stock market investors... However, it could also be the news we need to see in order for the rate of inflation to continue decreasing and allow the Fed to eventually reduce interest rates."
The much-anticipated Personal Consumption Expenditures index for April is scheduled for release on Friday. This story will continue to develop.
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Businesses may need to reassess their investment strategies due to the volatile market conditions, as indicated by the Dow Jones Industrial Average's significant decrease. The selling of bonds and the Fed's fear of inflation are contributing factors to this turbulence, potentially affecting many businesses' investment prospects.
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