US Market Tank. NVDA lone Survivor?
The Great Divide.
On Thu, 23 May 2024 it was almost a tale of 2 cities. How so ?
Well, US market tanked - a pullback (or correction if you insists), while $NVIDIA Corp(NVDA)$ continued to bubble up from strength to strength.
The semiconductor king pin did not manage to give US market a lift, along the way while it powered beyond the $1,000 resistant level.
By 4:00pm when US market closed: (see above)
DJIA: -1.53% (-605.78 to 39,065.26).
S&P 500: -0.74% (-39.17 to 5,267.84). More than 400 names were lower. IT was the only positive sector for the day.
Nasdaq: -0.39% (-65.51 to 16,736.03).
Catalysts (?)
What spooked the US stocks pulled back in afternoon trading, while Nvidia was immune to it ?
(1) US PMI Preliminary (May 2024).
US economic upturn has accelerated again after 2 months of slower growth.
The early PMI (preliminary) data is signaling the fastest expansion for just over 2 years in May.
Actuals is +0.9 higher than Wall Street’s forecast and April 2024’s data.
Latest data puts the US economy back on course for another solid GDP gain for Q2 2024.
It is not good news where interest rate cut is concerned.
Bond yields spiked and stocks slid after the PMI report has been digested.
With manufacturer’s (selling) price ticking higher, it signals modestly above-target inflation.
With main inflationary impetus steming from manufacturing rather than services, it means rates of inflation for costs & selling prices are now elevated.
Suggesting the final stretch to the Fed’s 2% target still seems elusive.
Market nervousness stems from the possibility that the Fed may not commence interest cut in the much anticipated September 2024.
(2) US Weekly Jobless claims.
To add fuel to fire, US weekly jobless claims data out on Thursday served to reinforce the spookiness permeating the already nervous market.
Jobless claims for week ending 18 May 2024, fell by -3.59% from last week’s claims of 223,000 to 215,000.
Lower weekly jobless claims indicated the labor market remains on firm footing.
The results reinforces investors’ concerns that the Fed will not lower interest rates soon.
CME FedWatch Tool (Sep 2024)
And just like that, the CME FedWatch tool for September 2024 FOMC meeting changed once again.
Looking at “22 May 2024” data column, probability of a -0.25% interest cut was 49.4%.
After the 2 reports were out, a September 2024 probability interest cut fell by -2.8%.
Summary.
On Thursday, Piper Sandler Chief Market technician Craig Johnson said:
US market is in a strange mix of leadership, combined with breakdowns in transportation stocks ( eg. $Boeing(BA)$ ) and mediocre breadth readings.
This makes Mr Johnson unsure if the recent gains can hold, he is not so confident that a new leg higher will be sustained from current levels.
Is a further pullback to be expected in the coming days / weeks, fulfilling the market adage - Sell in May and Go away ?
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Do you think US market will stage a recovery to close off Friday on a high ?
Do you think Nvidia will continue to shoot for the moon today, to cap off the week on a high ?
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