U.S, GDP Growth Revised Lower, Retailers Report Mixed Quarterly Results

Barry Adams
30 May, 2024
New York City

Market sentiment was cautious ahead of the release of the inflation update on Friday. 

The S&P 500 index and the Nasdaq Composite turned lower as investors debated the future direction of monetary policy and an appropriate level of interest rate. 

The yield on 10-year U.S. Treasury notes recovered to 4.5% after rising to 4.6% in the previous session, sparking a broad selloff in stocks that covered all major industry sectors. 

The rise in bond market yield poses a significant challenge as safer investment offer competitive returns of close to 5%, dampening demand for stocks. 

Retailers were in focus after positive earnings from Abercrombie & Fitch, Best Buy, Foot Locker, and Dollar General raised the prospect of earnings improvement in the second half. 

The first quarter economic growth estimate was revised lower to an annual pace of 1.3% from the previous estimate of 1.6%, according to a report released by the U.S. Commerce Department. 

The downward revision was due to the reduction in consumption growth to 2.0% from the preliminary estimate of 2.5%. 

The initial jobless claims increased by 3,000 to 219,000 in the week ending May 25, according to the weekly report from the U.S. Department of Labor. Continuing claims, which run one week behind, edged slightly higher to 1.799 million. 

Investors are looking forward to the release of personal consumption expenditure index data, along with the personal income and outlay report, on Friday. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index fell 0.3% to 5,252.44, and the Nasdaq Composite dropped 0.2% to 16,886.25.

The yield on 2-year Treasury notes edged lower to 4.95%, 10-year Treasury notes increased to 4.57%, and 30-year Treasury bonds edged higher to 4.71%.

WTI crude oil decreased $0.62 to $78.66 a barrel, and natural gas prices eased 3 cents to $2.63 a thermal unit.

Gold decreased by $4.68 to $2,343.74 an ounce, and silver fell 58 cents to $31.46. 

The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 104.77.

 

U.S. Stock Movers

Salesforce declined 17% to $224.60 after the customer management software developer reported slightly lower-than-expected revenue of $9.13 billion. 

The stock was also under pressure after the company's current sales guidance fell short of market expectations. 

Foot Locker surged 14.5% to $25.75 after the apparel and sneaker retailer reported better-than-expected adjusted first quarter earnings of 22 cents per share. 

The company's improved earnings suggest that the latest plan to reorganize is showing early signs of progress. 

Walt Disney increased 0.6% to $101.25 after activist investor Nelson Peltz sold his entire stake in the media company for a profit of $1 billion and abandoned his plan to change management. 

Peltz sold his $30 million stake at an average price of $120 per share after he lost the proxy battle to change company management. 

Kohl's Corp. declined 26.2% to $20.15 after the department store chain reported weaker-than-expected quarterly results and outlook. 

The retailer reported revenue of $3.18 billion, and net income swung to an unexpected loss of 4 cents per share. 

Best Buy soared 11.5% to $79.94 after the electronics retailer's earnings surpassed market expectations. 

American Eagle Outfitters plunged 9% to $21.85 after the apparel retailer reported weaker-than-expected sales in the first quarter.