U.S. Stocks In Holding Pattern, Global Markets Turn Lower

Alexander Garcia
22 May, 2024
Miami

Benchmark indexes on Wall Street were little changed as investors eyed Nvidia's earnings after the close. 

Investors also digested a fresh batch of earnings, including updates from leading retailers. 

The S&P 500 index and the Nasdaq Composite inched lower after Target Corp. reported weaker-than-expected earnings and said consumers are restricting discretionary items. 

Artificial intelligence technology-driven stocks were also in focus ahead of Nvidia's earnings release after the market close. 

The chipmaker had guided sales in the April quarter to range between $23.5 billion and $24.5 billion, an increase of fourfold from a year ago. 

Wall Street analysts are estimating the company to report earnings of $5.60 per share, a five-fold jump from $1.09 a year ago. 

The S&P 500, the Dow, and the Nasdaq Composite reached new record highs last week, driven by positive corporate results and continued expectations of interest rate cuts in the second half. 

However, policymakers in recent weeks have signaled that rate-cut expectations in the near future may be misplaced as inflation is still too high and higher rates may be needed longer than previously anticipated to bring down inflation to 2%. 

Inflation has dropped from a high of 9.5% to below 4%, but prices are still rising faster than 3%, despite eleven rate hikes over the last two years. 

 

Existing Home Sales Slipped In April

Existing home sales declined in April after inventory of homes available for sale rose, the National Association of Realtors reported Wednesday. 

Home sales declined 1.9% from the previous month to a 4.14 million annual rate in April, up from the upwardly revised 4.22 million in March. 

Sales also fell by 1.9% from one year ago. 

"Home sales changed little overall, but the upper-end market is experiencing a sizable gain due to more supply coming onto the market," said NAR Chief Economist Lawrence Yun.

The median existing-home price for all housing types in April was $407,600, an increase of 5.7% from $385,800 in the previous year. 

The median home price increased for the tenth month in a row and reached a record high for the month of April. 

All four U.S. regions registered price gains.

The number of homes available for sale at the end of April was 1.21 million units, an increase of 9% from March and 16.3% from one year ago, when inventory was 1.04 million. 

Unsold inventory sits at a 3.5-month supply at the current sales pace, up from 3.2 months in March and 3.0 months in April 2023. 

For homes priced at $1 million or more, inventory and sales increased by 34% and 40%, respectively, from a year ago.

 

U.S. Indexes and Treasury Yields

The S&P 500 index was nearly unchanged at 5,318.77, and the Nasdaq Composite edged up a fraction to 16,833.72. 

The yield on 2-year Treasury notes edged higher to 4.88%, 10-year Treasury notes increased to 4.48%, and 30-year Treasury bonds edged higher to 4.59%.

WTI crude oil decreased $0.74 to $78.22 a barrel, and natural gas prices increased 11 cents to $2.79 a thermal unit.

Gold decreased by $30.41 to $2,391.94 an ounce, and silver fell 71 cents to $31.31. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.74.

 

U.S. Stock Movers

Target Corp. declined 8.8% to $142.10 after the retailer reported weaker-than-expected earnings and a decline in sales driven by weakening growth trends in discretionary item sales. 

Urban Outfitters rose 4.2% to $43.0 after the apparel retailer reported better-than-expected sales and earnings in its latest quarter. 

Toll Brothers decreased 0.5% to $129.50 after the luxury home builder's quarterly results surpassed market expectations and the company raised its full-year outlook. 

Nvidia Corp. increased 0.6% to $957.50 ahead of the advanced chipmaker's quarterly results after the close of regular trading sessions. 

Nvidia has jumped 98% in the year so far and soared 205% in the last year of trading. 

Viasat declined 10.4% to $16.82 after the satellite communication service provider reported a loss of 80 cents in its fiscal fourth quarter. 

Analog Devices increased 5.4% to $228.32 after the company reported $1.26 earnings per share and $2.16 billion in revenue in the fiscal second quarter. 

 

European Markets Extend Losses Third Consecutive Day 

European markets headed lower amid ongoing rate uncertainty as investors reviewed the latest update on UK inflation. 

Benchmark indexes in Frankfurt, Paris, and London turned lower for the second day in a row and traded below record levels set in the previous week. 

 

UK Consumer Price Inflation Eases In April 

Consumer price inflation in the U.K. rose 2.3% in April, slower than 3.2% in March, the Office for National Statistics reported Wednesday. 

The annual inflation rate dropped to the lowest level since July 2021 after gas and electricity costs declined and recreation and culture costs rose at a slower pace. 

The core rate of inflation, which excludes food and energy prices, eased to 3.9% from 4.2% in March and dropped to the lowest level since October 2021. 

 

EU Car Registrations Rebound In April

The passenger car market in the European Union expanded by 13.7% in April, the European Automobile Manufacturers' Association reported on Wednesday. 

Vehicle sales rebounded from a 5.2% decline in March, following the strength in the four largest markets: Germany, France, Spain, and Italy. 

Sales rose in Spain by 23.1%, in Germany by 19.8%, in France by 10.9%, and in Italy by 7.7%. 

The increase in April's vehicle sales could be attributed to two more selling days compared to a year ago, when Easter holidays fell in April last year. 

Battery electric car sales in April rose 14.8% to 108,552 units and held its market share steady around 12%. 

Battery-powered vehicle sales in France soared 45.2%, in Belgium they advanced 41.6%, and in Germany they decreased 0.2%. 

Petrol car sales increased 7.3% to 328,967, and hybrid car sales surged 33.1% to 265,992. 

During the first four months of the year, new car registration in the European Union increased 6.6% to 3.7 million units, and battery-powered vehicle sales advanced 6.4% to 442,000. 

 

Europe Indexes and Yields

The DAX index decreased by 0.3% to 18,680.20; the CAC-40 index fell by 0.6% to 8,092.11; and the FTSE 100 index inched lower by 0.5% to 8,370.33. 

The yield on 10-year German bonds edged up to 2.53%; French bonds inched higher to 3.02%; the UK gilts edged higher to 4.23%; and Italian bonds inched higher to 3.83%.

The euro edged higher to $1.084; the British pound inched higher to $1.273; and the U.S. dollar gained to 91.35 Swiss cents.

Brent crude decreased $0.85 to $82.07 a barrel, and the Dutch TTF natural gas rose by €1.83 to €34.73 per MWh.

 

Europe Stock Movers

British Land Company advanced 1.7% to 401.59 pence and gained for the second day in a row after the real estate developer agreed to sell its stake in a shopping center located in Sheffield, UK. 

Marks & Spencer Group gained 6.6% to 290.40 pence, and the retailer said annual profit rose to a decade-high. 

Revenue in the fiscal year ending in March rose 9.3% to £13.0 billion from £11.9 billion, profit after tax increased to £425.2 million from £364.5 million, and basic earnings per share advanced 18.4% to 21.9 pence from 18.9 pence a year ago. 

The company announced its final dividend of 2 pence per share, payable on July 5, to shareholders on record on May 31. 

RS Group PLC gained 1.1% to 815.50 pence after the British industrial and electrical products maker reported underlying annual profit declined by 25%. 

Aalberts NV decreased 3.1% to €46.56 after the Dutch engineering company said revenue in the first four months fell 2.6% from a year ago. 

Organic revenue for the building technology segment fell 6.1% and the industrial technology segment rose 1.7%, and the company said the added value margin "remained on a good level."

In 2023, the company's revenue increased by 4.5% to €3.3 billion, and earnings per share before amortization were €3.38.

Billeurd AB added 1.2% to SEK 112.50 after the Swedish paper company said it no longer plans to convert its Escanaba, Michigan, paper mill to cardboard production and focus on packaging materials after eighteen months of deliberations. 

 

China Stock Market Rally Loses Steam

Stocks in Shanghai and Hong Kong rebounded in early afternoon trading, and investors await earnings from leading tech companies. 

Market indexes in Shanghai and Hong Kong struggled to stay above flatline, and electric vehicle makers rebounded a day after Li Auto reported sharply lower earnings. 

EV makers advanced after Xpeng reported better-than-expected earnings. 

Lenovo and Xiaomi were in focus, and both companies are set to report earnings later in the session. 

The market rally appears to have run its course as investors looked for more signs of improving earnings. 

 

China Stock Movers 

The CSI 300 index increased 0.4% to 3,690.28, and the Hang Seng index advanced 0.2% to 19,253.54. 

Xpeng jumped 13.5% to HK$34.75 after the electric vehicle maker reported stronger-than-expected quarterly earnings. 

Net loss in the first quarter narrowed to 1.37 billion yuan from 2.34 billion yuan, after revenue surged 62% to 6.55 billion yuan from a year ago, respectively. 

The company sold 21,821 vehicles in the quarter, an increase of 20% from a year ago, and vehicle margin improved to 5.5% from a loss of 2.5% a year ago. 

Lenovo Group jumped 12.5% to HK$11.50 ahead of the personal computer maker's earnings later in the day. 

Xiaomi advanced 0.2% to HK$19.34, ahead of the smartphone maker's earnings later in the day. 

In Wednesday's trading, banks advanced and tech stocks traded down. 

ICBC, Bank of China, Agriculture Bank of China, and China Construction Bank gained between 0.2% and 0.7% in Wednesday's trading. 

Li Auto and Geely Automobile advanced about 1.8% after falling sharply in the previous session. 

China Vanke rose 2.8%, Longfor Group declined 1.8%, and China Resources Land added 0.1%.