US close: Stocks fall after Fed comments, strong jobs data

1st May 2024 22:15

(Sharecast News) - US stock markets finished mostly lower on Wednesday after the Federal Reserve highlighted a "lack of further progress" in bringing inflation down to its 2% target, while data showed private job gains were stronger than expected.

America's central bank stood pat on rates on Wednesday, as expected. However, the Fed refrained from hawkish comment - as some had feared - saying that interest rates are unlikely to rise further to bring down inflation despite stronger-than-expected readings over the past three months.

Stock markets initially jumped following the comments, but gains were quickly erased by the close, with the S&P 500 and Nasdaq dropping 0.3% and the Dow rising just 0.2%.

In its policy statement, the Federal Open Market Committee stated that there had been no additional progress in easing price pressures, and while inflation had slowed over the past year it still remains "elevated".

"It's likely to take longer for us to gain confidence that we are on a sustainable path to 2% inflation," said Fed chair Jerome Powell. Expectations remain however that inflation would still continue to come down this year, he said.

"The statement noted that the risks to achieving its employment and inflation goals have moved toward a better balance over the past year, suggesting that the door is not closed on rate cuts later this year. However, inflation data needs to cooperate," said Ryan Sweet, chief US economist at Oxford Economics.

Over recent months, financial markets have shifted to discounting just one interest rate cut before the end of 2024, instead of the six that were priced in at the end of 2023.

Labour market in focus

Private sector employment in the US rose more than expected April, according to figures released on Wednesday by the ADP. Employment increased by 192,000 from March, versus expectations for a 180,000 jump. Meanwhile, March's gain was revised from 184,000 to 208,000.

Meanwhile, the number of US job openings dropped by 3.7% to reach 8.488m last month - their lowest level in more than three years and below the 8.69m consensus estimate. However, the prior month's level of job openings had been revised up from 8.756m to 8.813m.

Mortgage applications fell 2.3% in the week ended 26 April, according to the Mortgage Bankers Association, extending the two-month-high decline of 2.7% seen in the previous week.

S&P Global's April manufacturing purchasing managers index stood at 50.0, little changed from the preliminary estimate of 49.9 but down from March's reading of 51.9. However, the ISM's manufacturing PMI fell to 49.2 in April, down from 50.3 in March and firmly below market expectations of a flat monthly reading.

Finally, US construction spending fell by 0.2% in March, according to the Census Bureau, following a revised flat reading in February and missing market expectations for a 0.3% increase.

Market movers

Amazon gained 2% after reporting that profits had more than tripled in the first quarter, principally driven by its cloud computing unit, with profits and revenues beating forecasts.

Shares in chipmaker maker Advanced Micro Devices dropped 9% despite delivering in-line revenue guidance for its current trading quarter - though the stock had gained nearly 70% over the past year as of Tuesday's close.

Pfizer put in decent gains after beating revenue estimates and lifting full-year profit guidance as the drugmaker benefitted from cost-cutting efforts and strong sales within its non-Covid segments.

Elsewhere, Starbucks tanked 16% after slashing its outlook following disappointing same-store sales; while CVS Health sunk 17% after reporting disappointing earnings and lowering profit guidance.

Dow Jones - Risers

Johnson & Johnson (JNJ) $151.18 4.56%

Boeing Co. (BA) $171.46 2.16%

3M Co. (MMM) $98.44 2.00%

Microsoft Corp. (MSFT) $394.94 1.44%

Amgen Inc. (AMGN) $277.37 1.25%

Dow Chemical Co. (DOW) $57.23 0.58%

McDonald's Corp. (MCD) $274.43 0.51%

Travelers Company Inc. (TRV) $213.06 0.47%

Coca-Cola Co. (KO) $61.93 0.26%

Procter & Gamble Co. (PG) $163.40 0.12%

Dow Jones - Fallers

Walgreens Boots Alliance, Inc. (WBA) $17.34 -2.20%

Nike Inc. (NKE) $90.34 -2.08%

American Express Co. (AXP) $231.46 -1.10%

International Business Machines Corporation (CDI) (IBM) $164.43 -1.06%

Caterpillar Inc. (CAT) $331.07 -1.05%

Chevron Corp. (CVX) $159.63 -1.02%

Walmart Inc. (WMT) $58.85 -0.84%

Verizon Communications Inc. (VZ) $39.20 -0.73%

Home Depot Inc. (HD) $331.97 -0.67%

Apple Inc. (AAPL) $169.30 -0.60%

Nasdaq 100 - Risers

Verisk Analytics Inc. (VRSK) $232.81 6.81%

Sirius XM Holdings Inc (SIRI) $3.05 3.74%

Biomarin Pharmaceutical Inc. (BMRN) $83.42 3.29%

Liberty Global plc Series C (LBTYK) $16.78 2.50%

Vertex Pharmaceuticals Inc. (VRTX) $402.14 2.38%

Amazon.Com Inc. (AMZN) $179.00 2.29%

Automatic Data Processing Inc. (ADP) $247.33 2.25%

Liberty Global plc Series A (LBTYA) $16.23 2.11%

Meta Platforms Inc. (META) $439.19 2.10%

Qurate Retail Inc. (QRTEA) $0.84 2.02%

Nasdaq 100 - Fallers

Starbucks Corp. (SBUX) $74.44 -15.88%

Skyworks Solutions Inc. (SWKS) $90.30 -15.28%

Kraft Heinz Co. (KHC) $36.28 -6.03%

Idexx Laboratories Inc. (IDXX) $468.60 -4.90%

Broadcom Inc. (AVGO) $1,242.86 -4.42%

Nvidia Corp. (NVDA) $830.41 -3.89%

Microchip Technology Inc. (MCHP) $88.79 -3.47%

KLA-Tencor Corp. (KLAC) $666.04 -3.37%

Analog Devices Inc. (ADI) $193.89 -3.35%

Lam Research Corp. (LRCX) $868.10 -2.94%