Stock market today: Dow eyes 40,000 as US futures regroup near record highs
05/16/2024 19:00
Signs of cooling inflation continued to spur bets for a Federal Reserve rate cut in September.
US stocks were taking a breather after a record-setting rally as signs of cooling inflation continued to spur bets for a Federal Reserve rate cut in September.
S&P 500 futures (ES=F) were close to flat on the heels of closing above 5,300 for the first time. Contracts on the Dow Jones Industrial Average (YM=F) and the tech-heavy Nasdaq 100 (NQ=F) were also little changed.
Stock gains have picked up pace as belief grows that the US economy is headed for a soft landing. All three major gauges ended Wednesday at all-time highs, leaving the Dow less than 100 points short of breaking through 40,000.
Coming after three hot prints in a row, April's tepid consumer inflation reading spread relief through a market bracing for higher-for-longer interest rates. Trader bets on a Fed rate cut in September rose to over 70%, per the CME FedWatch Tool, amid rising speculation about an easing as soon as July.
Read more: How does the labor market affect inflation?
Investors also jumped into bonds, sending the 10-year Treasury yield (^TNX) down near one-month lows at around 4.33%.
On the corporate front, Walmart's (WMT) posted quarterly profit, revenue and same-store sales beat Wall Street estimates. Shares in the US retail giant popped over 5% as it lifted its full-year forecasts.
Meanwhile, a mystery was solved as Warren Buffett's Berkshire Hathaway (BKR-B) revealed it has taken a $6.7 billion stake in Chubb (CB). The disclosure ended months of suspense over a position kept concealed in regulatory filings. The insurer's shares climbed about 8%.
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Freakishly strong quarter out of Walmart
This quarter out of Walmart (WMT) is a monster!
I had sell-side coverage on the company for a decade, but I have never seen a performance like this before — back-to-back at a time in which consumers and businesses are still feeling the bite of inflation.
A few rapid-fire highlights ahead of my interview with Walmart's CFO John David Rainey around 9:15 am ET on Yahoo Finance Live:
Gross profit margins up in all segments. Impressive
E-commerce sales by division: Walmart US +22%; International +19%; Sam's Club +18%
Full year guidance was raised, but it feels conservative after this quarter.
The never-ending AI talk
I was driving into work today and caught an interview with the CEO of an overseas company that just reported earnings. They got two questions in a row on AI.
It sounded like they barely knew what AI was and hadn't visited the R&D department in a while. But therein lays the problem with this crop of AI: most leaders of public companies don't truly understand it at all. And that's a risk to investors.
Despite the lack of deep knowledge on the topic, that isn't stopping CEOs from blowing hot air on AI on earnings calls! Goldman Sachs pointed out today in a new note that 41% of S&P 500 companies have mentioned AI on first quarter earnings calls, up from 23% a year ago.
Just look at the surge below on AI chatter.
Earnings calls have become AI calls. (Goldman Sachs)