Market Commentary - Foreign Markets
US Dow falls 330 points ahead of inflation data As on : 31-May-24  08:51

US stock market finished session firmly in negative territory on Thursday, 30 May 2024, as risk sentiments weighed down by weaker than expected earnings and disappointing guidance from Salesfoce. Meanwhile, persistent concern about the outlook for interest rates also continued to weigh on the markets ahead of the release of closely watched inflation data on Friday.

The Commerce Department is due to release its report on personal income and spending in the month of April on Friday, which includes readings on inflation said to be preferred by the Federal Reserve. The inflation data could have a significant impact on the outlook for interest rates ahead of the Fed's next monetary policy meeting on June 11-12.

At closing bell, the Dow Jones Industrial Average index declined 330.06 points, or 0.86%, to 38,111.48. The S&P500 index dropped 31.47 points, or 0.6%, to 5,235.48. The tech-heavy Nasdaq Composite index decreased by 183.50 points, or 1.08%, to 16,737.08.

Total 9 of 11 S&P500 sectors ended higher along with the S&P500 Index. Real estate sector was top performer, rising 1.51%. Information technology sector was bottom performer, falling 2.45%.

Salesforce plunged 19.7% after the cloud-based software company reported weaker than expected fiscal first quarter revenues and provided disappointing fiscal second quarter guidance.

ECONOMIC NEWS: US GDP Growth Slows In Q1 2024- Revised data released by the Commerce Department on Thursday showed U.S. economic growth slowed by more than previously estimated in the first quarter of 2024. The Commerce Department said gross domestic product climbed by 1.3% in the first quarter compared to the previously reported 1.6% jump. The slower than previously estimated growth reflected downward revisions to consumer spending, private inventory investment and federal government spending. Meanwhile, upward revisions to state and local government spending, nonresidential fixed investment, residential fixed investment and exports helped limit the downside. The report also said the slowdown in GDP growth compared to the fourth quarter primarily reflected decelerations in consumer spending, exports, and state and local government spending and a downturn in federal government spending. These movements were partly offset by an acceleration in residential fixed investment, the Commerce Department said. On the inflation front, the surge by the personal consumption expenditures price index in the first quarter was downwardly revised to 3.3% from 3.4%, although this still represents a significant acceleration from the 1.8% increase in the fourth quarter. Excluding food and energy prices, the PCE price index surged 3.6% in the first quarter compared to the previously reported 3.7% spike. The core CPE Index jumped 2.0% in the fourth quarter. US Pending Home Sales Pull Back In April- A report released by the National Association of Realtors on Thursday showed a sharp pullback by pending home sales in the U.S. in the month of April. NAR said its pending home sales index plunged by 7.7% to 72.3 in April after spiking by 3.6% to an upwardly revised 78.3 in March. A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale. The sharp pullback by pending home sales reflected weakness in all regions of the country, with a 9.5% nosedive by pending home sales in the Midwest leading the way lower. Pending home sales in the West and South also tumbled by 8.5% and 7.6%, respectively, while pending home sales in the Northeast slumped by 3.5%.

US Trade Deficit At $99.4 Billion In April- The U.S. Census Bureau announced the international trade advance statistics for April 2024. The international trade deficit was $99.4 billion in April, up $7.1 billion from $92.3 billion in March. Exports of goods for April were $169.9 billion, $0.9 billion more than March exports. Imports of goods for April were $269.3 billion, $8.0 billion more than March imports.

US Wholesale Inventories Down 1.6% On Year In April- The U.S. Census Bureau announced the wholesale inventories and retail inventories advance statistics for April 2024. Wholesale inventories for April were estimated at an end-of-month level of $896.3 billion, up 0.2% from March 2024, and were down 1.6% from April 2023. The February 2024 to March 2024%age change was unrevised from the preliminary estimate of down 0.4%. Retail inventories for April were estimated at an end-of-month level of $790.9 billion, up 0.7% from March 2024, and were up 4.8% from April 2023. The February 2024 to March 2024%age change was revised from up 0.2% to up 0.1%.

US Crude Oil Inventories Pull Back Much More Than Expected- The Energy Information Administration released a report on Thursday showing U.S. crude oil inventories tumbled by much more than expected in the week ended May 24th. The report said crude oil inventories slumped by 4.2 million barrels last week after climbing by 1.8 million barrels in the previous week. With the sharp pullback, U.S. crude oil inventories are about 4% below the five-year average for this time of year, the EIA said. Meanwhile, gasoline inventories increased by 2.0 million barrels last week but remain about 1% below the five-year average for this time of year. Distillate fuel inventories, which include heating oil and diesel, also climbed by 2.5 million barrels last week but remain about 6% below the five-year average for this time of year. US Weekly Unemployment Claims Show Modest Increase- First-time claims for U.S. unemployment benefits crept modestly higher in the week ended May 25th, according to a report released by the Labor Department on Thursday. The report said initial jobless claims rose to 219,000, an increase of 3,000 from the previous week's revised level of 216,000. The Labor Department said the less volatile four-week moving average also edged up to 222,500, an increase of 2,500 from the previous week's revised average of 220,000. Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also climbed by 4,000 to 1.791 million in the week ended May 18th. The four-week moving average of continuing claims also rose to 1,786,250, an increase of 5,750 from the previous week's revised average of 1,780,500.

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