The trading week concluded on a mixed note for U.S. stocks as investors grappled with escalating geopolitical conflicts and persistent inflationary pressures.
The Dow Jones Industrial Average managed to eke out gains, propelled by robust earnings from American Express, while the S&P 500 and the Nasdaq Composite faced declines, extending their losing streaks.
The Dow Jones Industrial Average rose by 211.02 points, or 0.56 percent, reaching 37,986.4. This uptick was primarily driven by a remarkable rally of over 6 percent in American Express shares following better-than-expected earnings. However, the broader market indices experienced downturns, with the S&P 500 dropping by 43.89 points, or 0.88 percent, to 4,967.23. The Nasdaq Composite Index suffered the most significant decline, shedding 319.49 points, or 2.05 percent, to 15,282.01, marking its longest losing streak in over a year. Both the S&P 500 and the Nasdaq recorded their sixth consecutive negative days, a streak unseen since October 2022.
Amidst the market fluctuations, six out of the 11 primary S&P 500 sectors ended the day in positive territory. Utilities and financials led the gainers, rising by 1.47 percent and 1.35 percent, respectively. Conversely, technology and communication services sectors led the laggards, declining by 3.08 percent and 2.03 percent, respectively.
The sentiments were influenced by remarks from Chicago Federal Reserve President Austan Goolsbee, who highlighted the challenges in curbing inflation this year. Goolsbee stated that given the strong labor market and the progress made in easing inflation over a longer timeframe, the Fed’s current restrictive monetary policy remains appropriate. This sentiment aligns with a broader shift among U.S. central bankers away from anticipating imminent interest rate cuts.
The CBOE Volatility Index, often referred to as the “fear index” of the U.S. stock market, rose to 21.36 points during the trading session, surpassing the 20-point threshold for the first time since October 30, 2023. Some analysts argue that increased volatility is justified following a period of significant market gains, as investors recalibrate their expectations amidst rising interest rates and geopolitical tensions.
On the corporate front, despite surpassing revenue and profit expectations in its quarterly earnings report, Netflix witnessed a substantial decline of over 9 percent. This decline occurred despite the streaming service noting a 16 percent increase in subscribers compared to the previous year. Netflix also announced its decision to discontinue reporting paid memberships starting in 2025.
In the technology sector, chip stocks like Nvidia and Super Micro Computer faced mounting pressure during afternoon trading, signaling a notable shift away from the sector that had previously led the bull market. Nvidia experienced its worst day since March 2020, with a decline of 10 percent, while Super Micro Computer saw a staggering 23 percent drop. This trend underscores the evolving dynamics within the market as investors navigate through geopolitical uncertainties and inflation concerns.
