S&P 500 and Nasdaq Extend Losses to Fourth Consecutive Day

Barry Adams
17 Apr, 2024
New York City

Benchmark indexes on Wall Street extended losses, and Treasury yields hovered near 3-month highs as investors awaited a fresh batch of earnings. 

The S&P 500 index and the Nasdaq Composite declined and extended their losses to the fourth session in a row on interest rate uncertainties and rising tensions in the Middle East. 

Treasury yields edged slightly lower, following a rebound in the previous five sessions, after Federal Reserve Chairman Jerome Powell said that policymakers would like to see "further progress on inflation" before the interest rate could be cut. 

Powell's comments did little to persuade bond traders, and investors debated future rate paths, including the possibility of a rate increase if economic growth accelerates and higher-priced crude oil drives an inflation rebound. 

The latest updates on retail sales, inflation, nonfarm payrolls, durable goods output, and housing market activities confirmed that the U.S. economy and labor markets are resilient, despite multiple rate hikes over the last eighteen months. 

Moreover, service sector inflation is still running at a 4% annual rate, suggesting that the Federal Reserve will find it difficult to bring down inflation from above the 3% level to the target rate of 2%. 

Consumer price inflation has stayed above 3% over the last nine months in a row. 

 

U.S. Indexes and Yields

The S&P 500 index decreased 0.4% to 5,033.14, and the Nasdaq Composite fell 0.6% to 15,769.53. 

The yield on 2-year Treasury notes edged higher to 4.98%, 10-year Treasury notes inched down to 4.66%, and 30-year Treasury bonds edged lower to 4.77%.

WTI crude oil decreased $1.23 to $84.12 a barrel, and natural gas prices decreased 6 cents to $1.66 a thermal unit.

Gold increased by $7.75 to $2,384.78 an ounce, and silver increased 39 cents to $28.57. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 106.19.

 

U.S. Stock Movers

United Airlines increased 4.9% to $43.56 after the international carrier reported stronger-than-expected first quarter results supported by sustained travel demand. 

J.B. Hunt Transport Services declined 7% to $170.02 after the trucking and logistics firm reported weaker-than-expected revenue and earnings in its latest quarter. 

The transport services company reported quarterly revenue of $2.94 billion and earnings per share of $1.22. 

Autodesk declined 5.8% to $215.01 after the company said it would further delay its annual 10-K filing because of an ongoing internal investigation into the company's audit committee of the board of directors. 

Travelers Companies declined 2.7% to $217.0 after the insurance company reported weaker-than-expected quarterly results. 

Tesla Inc. increased 0.9% to $158.57 after the company said it would ask shareholders to revote the $56 billion pay package for the company's chief executive, Elon Musk. 

 

European Markets Rebounded Following Positive Quarterly Results 

European stock markets traded higher after a fresh batch of corporate results lifted the market mood. 

Benchmark indexes in Frankfurt, Paris, and London advanced more than 0.5% after results from Adidas, LVMH, Rio Tinto, and ASML exceeded market estimates. 

On the economic front, consumer price inflation in March rose 3.2%, the Office for National Statistics reported Wednesday. 

The inflation slowed to the lowest level seen in September 2021 due to a slowdown in food inflation to 4.0% from 5.0% and a slower pace of increase in restaurant and hotel inflation to 5.8% from 6.0%. 

Core inflation, which excludes volatile food and energy prices, slowed to 4.2% from 4.5% in February, the lowest since December 2021. 

On a monthly basis, consumer prices rose at a rate of 0.6%, matching the rate in the previous month in February. 

 

Europe Indexes and Yields

The DAX index increased by 0.2% to 17,792.78; the CAC-40 index rose by 0.8% to 7,999.43; and the FTSE 100 index inched higher by 0.4% to 7,847.99.

The yield on 10-year German bonds edged up to 2.48%; French bonds inched higher to 2.99%; the UK gilts edged higher to 4.29%; and Italian bonds inched lower to 3.88%.

The euro edged higher to $1.061; the British pound inched higher to $1.242; and the U.S. dollar edged higher to 91.07 Swiss cents.

Crude oil prices traded near five-month highs amid rising tensions between Iran and Israel, and investors worry about possible crude oil supply disruptions in the Red Sea.

Crude prices turned lower in the afternoon trading after the U.S. government report showed that inventories rose by 2.73 million barrels in the week ending on April 12, following a 5.8 million barrels increase in the previous week. 

U.S. crude oil inventories rose more than 1.6 million increase estimated by several analysts.  

Brent crude decreased $1.79 to $88.72. a barrel, and the Dutch TTF natural gas rose by €2.24 to €31.38 per MWh.

 

Europe Stock Movers

LVMH rose 4.4% to €815.50 after the luxury fashion group reported a slower than expected decline in sales in the first quarter. 

The fashion company also offered an optimistic view about sales in Asia. 

Total revenue in the first quarter declined 2% to €20.7 billion from €21.0 billion, and selective retailing increased 5% to €4.17 billion from €3.97 billion. 

Fashion and leather goods sales declined 2% to €10.5 billion, and wine and spirits sales declined 16% to €1.4 billion. Watches and jewelry sales fell 5% to €2.4 billion, and perfumes and cosmetics sales rose 3% to €2.2 billion. 

"Europe and the United States achieved growth on a constant currency and consolidation scope basis over the quarter; Japan recorded double-digit revenue growth; the rest of Asia reflected the strong growth in spending by Chinese customers in Europe and Japan," the company noted in an investor update. 

Adidas increased 8.2% to €219.0 after the German athletic shoemaker upgraded its 2024 profit outlook. 

Volvo AB rose 2.4% to SEK 289.30 after the Swedish truck maker reported a smaller-than-expected decline in its adjusted operating profit. 

Rio Tinto Plc rose 3% to 5,415.0 pence, despite the mining company reporting a 5% decline in iron ore shipments in its latest quarter. 

ASML Holding decreased 3.2% to €884.60 after the Dutch chipmaking equipment maker reported fewer-than-expected new orders in the first quarter. 

New orders in the quarter totaled €3.6 billion, compared to a consensus of €5.4 billion estimated by analysts surveyed by Reuters. 

Revenue in the first quarter declined to €5.29 billion, compared to €7.23 billion in the fourth quarter of 2023. 

Net income fell to €1.2 billion from €2.04 billion and diluted earnings per share dropped to €3.11 from €5.21 a year ago, respectively. 

The company said sales in the second half are likely to pick up a faster pace, and the chipmaking equipment maker reiterated its annual sales estimate to match last year's sales of €27.6 billion. 

 

 

Nikkei Extends Weekly Losses, Yen Sank to a New 34-year Low 

Stocks in Tokyo traded down, tracking overnight losses in Europe and the U.S. 

Market indexes traded down amid rising tensions in the Middle East and worries of government intervention in the currency market.

The Japanese yen traded at 154.65 against the U.S. dollar in Tokyo at 1.25 p.m. 

The yield on 10-year Japanese government bonds hovered near 0.88% and on 2-year bonds approached 0.27%, and investors worried that the bond yield may have to rise after the hawkish comments from the Federal Reserve chairman, Jerome Powell. 

Global bond markets have lacked direction after the latest string of U.S. economic data suggested that the Federal Reserve is likely to keep rates higher. 

The higher-for-longer U.S. interest rates are likely to support higher rates around the world, as bond market yields in developed and developing economies reference the U.S. bond markets. 

Japan market indexes traded down after U.S. Federal Reserve Chairman Jerome Powell confirmed at a panel discussion that policymakers need more time before lowering interest rates. 

“Given the strength of the labor market and progress on inflation so far, it is appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us,” Powell added. 

The Nikkei 225 Stock Average declined 0.5% to 38,293.27, and the Topix index decreased 0.7% to 2,677.18. 

Banks were among the leading decliners in Tokyo.

Mitsubishi UFJ, Sumitomo Mitsui Financial, and Mizuho Financial declined between 1% and 2%.

Tech stocks traded mixed, and Softbank fell 1%, but Tokyo Electron, Screen Holdings, Advantest, Sakura Internet, and Lasertec Corp. fell between 1% and 4%. 

Resonac Holdings jumped 13.7% to ¥3,940.0 after the company lifted its profit outlook following a strong demand for chip materials. 

After the close on Tuesday, Resonac said 2024 revenue is expected to increase by 5.5% to 1.36 trillion yen, and net income is expected to swing to 25 billion yen from a loss of 18.99 billion yen in 2023. 

The chemical company had previously projected a 2024 profit of 10 billion yen. 

 

 

Shanghai and Hong Kong Stock Market Indexes Diverge 

Benchmark indexes in Shanghai edged higher, and the reference index in Hong Kong edged lower on the prospects of rates staying higher for longer. 

Market indexes in Hong Kong decreased after U.S. Federal Reserve chairman Jerome Powell struck a hawkish interest rate tone. 

Traders dialed down rate expectations in Hong Kong after Powell's comments because the Hong Kong dollar is liked by the U.S. dollar, and the Hong Kong Monetary Authority adjusted rates in lockstep with the U.S. interest rate changes. 

The CSI 300 index advanced 0.7% to 3,535.36, and the Hang Seng index decreased 0.1% to 16,238.09. 

Electric vehicle makers advanced after investors searched for bargains in recently beaten-down stocks. 

Li Auto advanced 2.3% to HK$113.20, BYD gained as much as 1% before falling down 1% to $203.0, and Xpeng gained 1.3% to $28.0. 

Banks advanced as investors returned after the Chinese economy expanded at a faster-than-expected 5.3% in the first quarter, but gains were limited after  Fitch Ratings lowered its view on the sector. 

Fitch lowered its credit rating outlook to negative from stable for Chinese banks, citing worries about China's public finances and cloudy economic outlook. 

ICBC gained 0.7% to HK$4.03, Bank of China jumped HK$3.29, and China Construction Bank advanced 0.4% to $4.78. 

HSBC Holdings declined 0.7% to HK$61.95, Agriculture Bank of China declined 0.5% to ¥4.41. 

Home builders traded mixed on the worries that the government is not likely to provide meaningful stimulus and may let some of the large state-controlled developers go under or force consolidation in the industry. 

Longfor Group declined 0.4% to HK$9.21, China Vanke gained 1.1% to HK$3.93, China Resources Land added 1% to $23.35, Henderson Land Development fell 2.2% to HK$22.55, and Sun Hung Kai Properties added 0.7% to HK$22.55.