The main Wall Street indexes ended the session on Thursday with a decline stock market struggled to mount a convincing recovery from Wednesday’s triple-digit pullback. Meanwhile, the Federal Reserve continues to flex its independence, with Chair Jerome Powell refusing to bow to President Trump’s presumptuous demand that he cut interest rates.
The blue-chip index Dow Jones Industrial Average wiped out 122.35 points to 26,307.79 points, while the broader S&P 500 dropped by 0.21% to 2,917.52 points and the technology Nasdaq Composite declined by 0.16% to 8,036.77 points despite the surge in Tesla’s stock price.
Real estate, health, and financials were the only market sectors up today, while Technology, Energy, Consumer Staples, and Consumer Discretionary all closed down on the day, leaving bulls battered and bruised after the selloff following the FOMC announcement yesterday.
The US Federal Reserve governor Jerome Powell said on Wednesday that low inflationary pressure may just be “temporary”, suggesting that no interest rate cuts are planned. His comment has prompted large sales in the previous session, with Dow wiping out 150 points.
Short-term traders have reduced the chances of lowering interest rates this year to below 50%.
The fall of main indexes also coincided with the statement of the House of Representatives Speaker, Nancy Pelosi, who accused Attorney General William Barr of lying to Congress. Investors are worried about new internal struggles that may lower the chances of the White House and Congress working together on infrastructure projects, debt lifting plans, and ratification of a trade deal with China.
President Trump said a second of his picks for a Federal Reserve position was out of consideration following resistance from Republican senators, a further setback to his efforts to place political allies at the central bank. Donald Trump tweeted Thursday that conservative commentator Stephen Moore “has decided to withdraw from the Fed process”. The announcement came less than two hours after Mr. Moore told The Wall Street Journal and other news outlets that he would continue to seek the nomination.
In the bond markets, the yields on 10-year and 30-year government securities rose to 2.547% and 2.935%, respectively.
Corporate stocks performance
There was a recession in the technology sector after Apple and Microsoft failed to keep the tops reached after their strong earnings statements earlier this week. Apple’s stock prices fell 0.65% after rising 6% on Tuesday when the company announced optimistic second-quarter forecasts and improved business in China. Microsoft’s share price dropped by 1.3% of its value, falling for the second day after the company had reached a market capitalization of 1 trillion USD for a short time after your strong financial report.
The earnings season continued today as Square announced stronger-than-expected results on Wednesday after the bell. But the company’s stock fell by more than 7% after it announced weaker-than-expected forecasts for the second quarter.
Under Armour and Dunkin ‘Brands announced better-than-expected financial results. Their share prices increased by 3.5% and 0.1%, respectively. Tempur Sealy shares rose by 7.4% after publishing stronger-than-expected results.
The stocks of Tesla appreciated by more than 3% after the company announced a plan to raise up to 2 billion USD, of which 1.35 billion USD of convertible bonds. The remaining 650 million USD must come from new shares. Elon Musk announced he would invest 10 million USD to increase his share in the company.
DowDuPont stock fell by 6%, wiping out year-to-date gains. The company posted a 28% slump in quarterly profit. Its shares are now down 2% year to date, far worse than the 13% gain in the Dow Jones Industrial Average.
The best performers of the session on the Dow Jones Industrial Average were Home Depot Inc (+1.11%), Merck & Company Inc (+1.02%) and Verizon Communications Inc (+0.83%). On the opposite side were Dow Inc (-6.11%), Caterpillar Inc (-2.16%) and Exxon Mobil Corp (-1.75%).
Corporate earnings reports
More than half of the S&P 500 companies reported their first-quarter earnings, and the results largely exceed expectations. According to FactSet, 74.7% of the S&P 500 companies have exceeded their earnings expectations.
DowDuPont posted a 28% slump in quarterly profit on Thursday, as floods in the United States delayed seed shipments and demand for its specialized chemicals used by the auto and smartphone industries declined. The company, which sells everything from circuit packaging and display materials for smartphones to lubricants and brake fluid for car makers, reaffirmed its full-year forecast for net sales to be about flat. DowDuPont’s adjusted net income fell to 1.89 billion USD in the first quarter ended March 31, from 2.63 billion USD a year earlier. On a per share basis, it earned 0.84 USD per share, in line with analysts’ estimates. The net sales at DowDuPont dropped by 9% to 19.65 billion USD, and at Dow, it fell by 10% to 10.77 billion USD.
The video game company Activision Blizzard revealed its earnings for the first quarter of 2019, a period that ended on March 31. The gaming company reported GAAP earnings of 1.825 billion USD. That is higher than its outlook of 1.715 billion USD, although the number is down from the 1.965 billion USD it earned during 2018’s first quarter. The company has an outlook of 1.315 billion USD for the second quarter of the year.