Stock market today: Stocks open steady as Dow tries to extend 6-day win streak
05/09/2024 20:39
Stocks have lost their bounce after a growing chorus of Federal Reserve officials made it clear that interest rates will need to stay higher for longer.
Stocks open mixed amid lackluster earnings
Stocks opened mixed on Thursday after a batch of lackluster earnings reports.
The Dow Jones Industrial Average (^DJI) dropped roughly 0.2%, indicating a reversal from the its six-day winning streak. The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) rose just above the flatline.
In corporate earnings news, downbeat annual revenue forecast from Arm (ARM) sent shares of the chip designer down more than 9%. Sector peers Nvidia (NVDA) and AMD (AMD) opened slightly lower.
Warner Bros. Discovery (WBD) shares fell 3% reported first quarter earnings that missed expectations on both the top and bottom lines. The media giant said it's "hopeful" for a deal with the NBA amid concerns the company may be at risk of losing media rights for the league to competitor NBCUniversal (CMCSA).
On the macroeconomic front, initial jobless claims jumped to 231,000 last week, their highest level since August. The Department of Labor print is another sign of a slowing jobs market following last month's jump in unemployment to 3.9%.
The data raises investors' expectations that the Federal Reserve will indeed have to cut rates this year to support the labor market.
Jobless claims hit highest level since August 2023
Weekly unemployment claims hit their highest level in nine months last week, surprising Wall Street and furthering signs that a red-hot labor market to start 2024 may be cooling.
Initial weekly jobless claims hit 233,000 in the week ending May 4, the highest level since August 2023, and well above the 212,000 economists had expected, per Bloomberg data.
But given claims have been low for much of the year, including in recent weeks, economists were hesitant to overreact to one week of data in a historically volatile series of economic data.
"We do not think that this is necessarily a sign of rapidly deteriorating conditions in the labor market," Jefferies US economist Tom Simons, who had been projecting a labor market slowdown at somepoint this year, wrote in a research note following the report.
He added: "The prints of the previous two weeks were the lowest for initial claims since mid-February, and claims remain locked in an improbably tight range for the last few weeks in the interim. They were bound to break at some point."
Oxford Economics lead US economist Nancy Vanden Houten said that given the surprise uptick, it will be important to follow the data series in the weeks ahead.
"If the higher level of claims persists or if claims rise further, it would be a sign of a further loosening in labor market conditions," Vanden Houten wrote in a note following. the release. "However, one week of data doesn't change our call for the Fed to keep interest rates at current levels until September."
The one line of caution in Tapestry's earnings report
Tapestry (TPR) shares are getting hit pre-market after earnings.
Lots to unpack here, but this line jumped off the earnings release for me. It comes after several quarters of strength for the maker of Coach, Kate Spade and Stuart Weitzman accessories:
"Realized a 3% decline in North America compared to the prior year, amid a challenging consumer backdrop."
Ahead of key CPI Index release next week, one grocer weighs in
Hopefully you have May 15 off from work - the latest CPI Index will be reported pre-market and could trigger all sorts of market volatility.
I am sort of saying this tongue in cheek, sort of.
Nonetheless, the report is likely to show still elevated food prices for American shoppers. In large part those high prices are being found at the country's grocery stores.
So I put this simply question to Whole Foods CEO Jason Buechel at the Milken conference this week: "Is there any relief coming in food prices?"
Buechel tells me he is working double time to ease the food shopping pain continuing to hammer households.
"I mean this has obviously been on the minds of customers for a while now. One of the things that we have been doing is working with all of our suppliers to find ways to minimize this impact. There are a number of ways that we have been doing this. One, we have increased the number of promotions for our customers and as a result, we have actually seen double-digit [percentage] unit growth on promotional items," Buechel said.
Continued Buechel, "We have also been putting some price investments in for our 365 items [private label]."
To say inflation at the supermarket has been on the minds of consumers may be an understatement — it may end up deciding the presidential election in November.
The cost of groceries increased 1.2% in March, according to the latest CPI Index data out of the Bureau of Labor Statistics (BLS). It marked the first month of year on year acceleration in US grocery prices since August 2022.
Dating back to the heights of the COVID-19 pandemic in March 2020, the cost of food at home has risen a startling 24.6%.
Appreciate the discounts at Amazon (AMZN) owned Whole Foods, Jason.
Full watch of our chat below.
Hard to poke holes in Robinhood's quarter
Robinhood (HOOD) getting a nice pre-market pop after earnings last night.
The bears would say the first quarter is the high water mark for Robinhood on the back of strong crypto trading volumes (crypto sales +232% year over year in the quarter). However, the realists would see a company that has come a long, long way from the meme stock insanity.
The company's new credit card is being released out into the wild, expenses are well under control and the platform is really starting to suck in retirement assets from competitors.
Coming later this year will be index options.
I'm not on board with Bernstein's call this morning that Robinhood could double sales by the end of 2025. But, I could see how the company may prove me wrong.
Tune into Yahoo Finance Live in the 3p ET hour for my chat with Robinhood co-founder and CEO Vlad Tenev.