Stock market today: Stock rally loses steam as S&P 500, Dow slip from records
09/26/2024 01:36
Now that the Fed has started cutting rates, the economy has taken to the fore for investors.
US stocks lost steam on Wednesday after markets hit all-time highs as investors looked to new data for clues to the health of the economy and the chances of another jumbo rate cut.
The Dow Jones Industrial Average (^DJI) reversed earlier gains to fall about 0.6%, while the S&P 500 (^GSPC) also slipped into negative territory, declining around 0.2% on the heels of record closes for both major indexes. The tech-heavy Nasdaq Composite (^IXIC) hugged the flatline after wavering in the green for most of the session.
The question now becomes whether or not the US economy could find itself in a recession, with concerns fanned by a surprisingly weak reading on consumer confidence. The debate centers on whether the Federal Reserve lowered rates by a bigger-than-usual 0.5% in response to a slowing economy and what further malaise means for another hoped-for deep cut.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
On the data front, new home sales declined in August following a sharp increase the month prior as ultra-high mortgage rates and lofty prices kept buyers mostly on the sidelines.
Mortgage applications, however, jumped to the highest level since 2022, according to MBA data released before the bell. The growth was driven by homeowners seeking to refinance loans as rates drop.
But the spotlight is firmly on Thursday's second quarter GDP print and Friday's crucial reading on the PCE index — the inflation gauge favored by the Fed.
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Disney+ password sharing crackdown is here
Disney's (DIS) password-sharing crackdown has officially begun.
According to a blog post, Disney+ expanded its crackdown to the US and other regions this week "to give its users ways to enjoy their Disney+ subscription along with a family member or friend, through the management of devices within a household."
Disney defines a household as "a collection of devices associated with your primary personal residence that are used by the individuals who reside there."
For users who share an account with someone outside of their household, the account holder can add an “Extra Member” for $6.99 per month for Disney+ Basic (with ads) or $9.99 for Disney+ Premium (ad-fee.)
Only one extra member is available per account but is not available for subscribers to the Disney bundle, which also includes ESPN+ and Hulu, the company noted.
The latest moves echo the strategy of Netflix (NFLX), which began implementing its password-sharing crackdown for US subscribers last May after first announcing the initiative in October 2022.
Warner Bros. Discovery’s (WBD) Max streaming platform has also hopped on the trend, revealing it will crack down on account sharing later this year.
Warren Buffett further trims stake in Bank of America
Warren Buffett's Berkshire Hathaway (BRK-A, BRK-B) sold more of its holdings in Bank of America (BAC).
Yahoo Finance's David Hollerith reports:
Late Tuesday, Berkshire Hathaway said it further trimmed its stake in the country’s second-largest bank by 21.6 million shares, making approximately $862.7 million in profits from the sales.
Berkshire has sold BofA stock in 10 of the past 11 weeks starting in mid-July, unloading a total of 218.5 million shares and earning $8.9 billion on those sales.
Berkshire still holds a 10.5% stake in the country's largest bank and the price of Bank of America’s stock has fallen roughly just as much since Buffett began selling his firm's longest-held bank stock position.
BofA is still up 16% so far this year, trailing rivals Goldman Sachs (GS), JPMorgan Chase (JPM), and Citigroup (C). Its stock was down slightly Wednesday morning.
Sector check: Utilities lead while energy lags
Utilities (XLU) led Wednesday's sector action, up about 0.7%. The sector, which encompasses one of the most defensive segments of the economy, has seen more of a boost in recent months amid the artificial intelligence boom. It's also been viewed as a hedge against a possible economic downturn.
Technology (XLK), Real Estate (XLRE), and Communication Services (XLC) followed to trade mostly in the green, while Energy (XLE) served as the day's biggest laggard, down about 1.6%.
Crude oil (CL=F) fell more than 2% on Wednesday to trade around $70 a barrel, reversing positive trends from the day prior, as investors bet on new China stimulus to boost demand. Brent (BZ=F), the international benchmark price, also fell Wednesday to hover north of $72.
(Source: Yahoo Finance) Chip chat: Nvidia shares are rising — here's why
Nvidia (NVDA), a top trending ticker on Yahoo Finance, climbed as much as 3% on Wednesday after Mizuho analyst Jordan Klein cited a recent Bain report, which projected that the market for artificial intelligence hardware and software could balloon to as much as $990 billion by 2027 — up from current levels of about $185 billion.
The analyst said the forecast “could calm buy-side worry/uncertainty over sustainability of large cloud [capital expenditures] and AI investment spending well beyond 2025."
The AI darling's stock is also moving higher on reports that CEO Jensen Huang is done selling his shares in the company. Huang has sold more than $700 million worth of the company's stock over the past few months.
Other chip stocks moved in tandem with Nvidia.
Semiconductor giant Micron (MU) inched up about 1% ahead of its highly anticipated fourth quarter earnings report. Intel (INTC) also jumped about 4%, just one day after the company revealed a pair of artificial intelligence chips as it seeks to improve its data center business.
What China's stimulus package means for stocks
China just announced its biggest economic stimulus since the pandemic.
Yahoo Finance's Jared Blikre breaks down what the stimulus means for stocks and commodities worldwide:
After the details of the monetary stimulus and support for the stock market were announced Tuesday by the People's Bank of China (PBOC), the nation's benchmark index, the CSI 300 (000300.SS), surged 4.3% — its largest jump since July 2020.
The country's currency, the renminbi (CNH=X), dropped 0.6% — the most since the Japanese yen imploded in early August.
In the US, stocks rose, but the biggest effect was felt in commodities. Silver futures (SI=F) skyrocketed over 4.5% to a decade-plus high. Copper futures (HG=F) — already on a nine-day tear — notched a 10th straight win as it surged to a two-month high.
The stimulus, China’s latest attempt to pull its economy out of a slump caused by a shaky property market and deflationary pressures, includes over $325 billion in measures, mostly via monetary — as opposed to fiscal — channels.
On Wednesday, Chinese shares extended their rally, with the Shanghai Composite finishing up 1.2%.
However, there remains growing skepticism about whether the steps will successfully turn around its economy.
New home sales fall in August
New home sales declined in August following a sharp increase the month prior as ultra-high mortgage rates and lofty prices kept buyers mostly on the sidelines.
New single-family home sales slid 4.7% month-over-month to an annualized rate of 716,000, according to government data released Wednesday morning. Sales did fall less than expected, however, as economists had been anticipating a decline of 5.3%.
The median sales price decreased 4.6% to $420,600, marking the seventh straight month of year-over-year price declines. Mortgage rates are also declining as rates have fallen for eight consecutive weeks.
Mortgage applications jumped to the highest level since 2022, according to MBA data released before the bell. The growth was driven by homeowners seeking to refinance loans as rates drop.
S&P 500, Dow open higher
The S&P 500 and Dow opened in positive territory on Wednesday after each hit an all-time high the day prior.
The benchmark S&P 500 (^GSPC) rose about 0.1%, while the Dow Jones Industrial Average (^DJI) inched up roughly 0.2%. The tech-heavy Nasdaq Composite (^IXIC) hugged the flat line.
