Inflation weighed on consumer spending
A “For Lease” sign at a storefront in San Francisco, California, US, on Wednesday, May 3, 2023.
Jason Henry | Bloomberg | Getty Images
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Any positive momentum stocks had on Monday dissipated yesterday, as downbeat economic signs weighed on indexes.
What you need to know today
- Some progress on averting the U.S. debt ceiling was made in Tuesday’s meeting between U.S. President Joe Biden and other lawmakers. The negotiations — which mostly involve work requirements for social programs — will continue as direct one-to-one talks between House Speaker Kevin McCarthy’s ally and two White House aides, who will act on Biden’s behalf.
- U.S. stocks dipped Tuesday on the back of weak economic data and disappointing earnings by Home Depot (more on that below). Asia-Pacific markets traded mixed Wednesday. Japan stocks, however, are a bright spot in the region. The country’s Topix rose 0.3% — hitting its highest point since August 1990 — as foreign investors, attracted by strong fundamentals and robust domestic demand, flock back to Japan, analysts said.
- Tesla’s annual shareholder meeting took place Tuesday. Some highlights: CEO Elon Musk said the company will deliver its first Cybertrucks this year; the “next gen” Tesla Roadster may go into production in 2024; a humanoid robot named Optimus is under development at Tesla. And no, Musk isn’t planning on stepping down from Tesla.
- PRO Market jitters are pushing investors into consumer staples, traditionally seen as defensive stocks — but market analysis shows those names are overbought and may have little-to-no upside.
The bottom line
Any positive momentum stocks had on Monday dissipated yesterday, as downbeat economic signs weighed on indexes.
Individual technology stocks had a good day — both Microsoft and Nvidia hit a 52-week high, while Alphabet jumped 2.6% and Meta added 2% — but even those large-cap stocks couldn’t stop the tech-heavy Nasdaq Composite from declining 0.2%.
Other indexes fared badly too. The S&P 500 closed 0.64% lower. And merely a day after breaking its five-day losing streak, the Dow Jones Industrial Average fell again. The stock index slid 1%, dropping below its 50-day average for the first time since March 30, suggesting that it has further to fall.
Both the Dow and the S&P were badly affected by Home Depot’s biggest miss in revenue expectations in more than 20 years, and its forecast that sales will decline this fiscal year. The home improvement retailer is “the most impactful retailer in the price-weighted Dow — having almost double the weight of Walmart,” wrote CNBC’s Robert Hum, and it has “both a greater index and earnings influence in the S&P 500 due to the Walton family’s hefty stake in Walmart that reduces its weighting in the main equity…
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