Dow slides 500 points, S&P 500 retreats from record while Nasdaq hits new heights
Is the Stock Market Crash Imminent?
The Dow Jones Industrial Average plunged 605.78 points, marking its worst day of 2024, while the S&P 500 and Nasdaq also retreated from record highs. Despite Nvidia's surge by 9.3% due to strong earnings and a stock split announcement, broader market sentiment was negative, with significant declines in sectors like transportation and over 400 S&P 500 stocks falling. Economic data indicating potential delays in interest rate cuts further dampened the market mood.
What factors contributed to the Dow Jones Industrial Average's significant drop on Thursday?
The Dow Jones Industrial Average's significant drop on Thursday can be attributed to several factors:
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Post-earnings rally in Nvidia failed to lift the broader market: Although Nvidia, a chipmaker and artificial intelligence darling, surged 9.3% after posting stronger-than-expected fiscal first-quarter results and announcing a 10-for-1 stock split, the broader market failed to benefit from this rise.
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Majority of stocks in the S&P 500 turned negative: More than 400 names in the S&P 500 were lower, indicating a lack of market breadth. Information technology was the only positive sector for the day.
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Stronger than expected economic data: Services and manufacturing data for May both topped economists’ expectations, according to purchase manager surveys from S&P Global released Thursday. This caused investors to cut their odds of a rate cut in September, as they believe the Federal Reserve may not lower interest rates soon.
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Traders pricing lower chances of a rate cut in September: Traders are currently pricing just a 51% chance the Fed will cut rates in its September meeting, down from 58% a day ago and nearly 68% in the prior week, according to the CME FedWatch Tool. When the level falls below 60%, it’s viewed as no longer likely that the Fed will take action.
These factors combined led to the Dow Jones Industrial Average's worst session of the year, with the 30-stock index sliding 605.78 points, or 1.53%.
How did Boeing's stock performance impact the Dow on that day?
Boeing's stock performance had a significant negative impact on the Dow Jones Industrial Average on the day in question. The company was identified as the biggest laggard in the Dow, with its shares falling by 7.5%. This substantial decline in Boeing's stock contributed to the Dow sliding 605.78 points, or 1.53%, marking its worst session of the year. This stark drop in Boeing's shares was a key factor in the overall downturn of the Dow on that day.