Slight Decline After Opening as Market Takes a Breather
S&P 500 Up Nearly 20% Over the Past Month
Wall Street: "Attempt to Break Previous Highs Soon"
Fed Officials to Deliver Public Speeches... Market Watches for Interest Rate Hints
All three major indices on the New York Stock Exchange were down on May 20 (local time). Despite having risen the previous day even after global credit rating agency Moody's downgraded the U.S. credit rating, the market entered a brief correction immediately after the opening, appearing to take a breather. The S&P 500, the leading U.S. stock index, also saw its seven-day winning streak put at risk.
As of 9:45 a.m. on the New York Stock Exchange, the blue-chip Dow Jones Industrial Average (Dow) was down 85.56 points (0.2%) from the previous trading day at 42,706.51. The large-cap S&P 500 index was down 20.9 points (0.35%) at 5,942.7, and the tech-heavy Nasdaq index was down 96.63 points (0.5%) at 19,118.83.
By stock, U.S. electric vehicle maker Tesla was up 1.26%. Elon Musk, Tesla CEO, pledged at the Qatar Economic Forum on this day that he would lead Tesla for the next five years. Home Depot, the largest U.S. home improvement retailer, was also up 0.79% as the company maintained its annual earnings outlook for this year. The buying momentum was driven by the company's guidance that sales would grow 2.8% this year. Nvidia was down 2.06%, while Apple and Microsoft (MS) were down 0.87% and 0.83%, respectively.
The market had previously undergone a correction due to aggressive tariff policies and concerns over an economic downturn, but recently showed signs of recovery following a U.S.-China trade agreement. The S&P 500 index has risen nearly 20% over the past 27 trading days and is approaching its previous high. Although Moody's downgraded the U.S. sovereign credit rating from the highest 'Aaa' to 'Aa1' on May 16, the market actually rose the following day, indicating a muted reaction from investors. However, uncertainties over tariffs persist, and concerns over stagflation (rising prices amid economic stagnation) are accumulating as additional risk factors.
Matt Maley, chief market strategist at Miller Tabak, said, "There is no doubt that stock market momentum is quite strong," but diagnosed, "However, the market is in an overbought condition in the short term and could take a pause at any time." He added, "If this pause does not lead to a serious reversal, the market is highly likely to test all-time highs again soon."
Investors are focused on speeches scheduled for today from members of the U.S. Federal Reserve (Fed). Thomas Barkin, President of the Richmond Fed, Raphael Bostic, President of the Atlanta Fed, Susan Collins, President of the Boston Fed, Adriana Kugler, Fed Governor, and Mary Daly, President of the San Francisco Fed, are all set to deliver public remarks in succession. Their comments are expected to provide hints regarding the future path of interest rates. The previous day, President Bostic stated that, considering both inflation and recession concerns, he prefers the Fed to cut its benchmark rate only once this year and supported holding rates steady for the time being.
U.S. Treasury yields were rising slightly, led by longer-term maturities. The benchmark 10-year U.S. Treasury yield was up 2 basis points (1bp=0.01 percentage point) from the previous day at 4.5%. The 30-year U.S. Treasury yield was trading at 4.97%, up 3 basis points from the previous session. The 2-year U.S. Treasury yield, which is sensitive to monetary policy, remained unchanged from the previous day at 3.98%.
The dollar was steady. The dollar index, which measures the value of the U.S. dollar against six major currencies, was unchanged from the previous day at 100.25.
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