On Wednesday, major stock indices experienced significant declines as investors reacted to disappointing employment and GDP data. Following the weaker-than-anticipated figures, companies such as Nvidia and Tesla saw sharp sell-offs, while Super Micro faced a dramatic drop after releasing earnings that fell short of expectations.
The Dow Jones Industrial Average plummeted by 1.7%, which translates to around 650 points. The S&P 500 followed closely, dropping 2.1%, with the tech-heavy Nasdaq composite faring the worst, losing 2.7%.
Investor sentiment was further affected by rising bond yields, with the 10-year Treasury yield increasing to 4.18%. In contrast, oil prices took a downturn, with West Texas Intermediate futures hovering around $59.75 per barrel.
Exchange-traded funds (ETFs) weren’t immune to the market turmoil; the Invesco QQQ Trust fell by 2.7%, while the SPDR S&P 500 ETF declined by 2.1%. Tesla shares decreased by 6%, interrupting a six-day winning streak, despite having recently surged above their 50-day moving average and approaching the 200-day line, a critical resistance level. The electric vehicle leader remains roughly 40% below its historical high.
Nvidia also faced challenges, with its stock dropping 4%. The company’s shares were struggling against resistance at the 10-week moving average, a point that investors are watching closely. Nvidia’s partner, Super Micro, reported preliminary earnings and sales figures that significantly missed Wall Street estimates, resulting in nearly a 20% plummet in its stock price.
From an economic perspective, the ADP employment report indicated that private payrolls rose by just 62,000 in April, falling short of the expected increase of 125,000 and down from March’s total of 155,000. Meanwhile, the Commerce Department reported a 0.3% decline in first-quarter GDP, compared to an anticipated growth of 0.2%.
Several companies released earnings reports, with notable movements: Booking saw its shares drop nearly 4%, while Caterpillar managed a gain of over 2%. First Solar suffered a more than 12% decline, and Starbucks shares fell by nearly 10%. Other significant movers included Stride, which gained 2%, and Tradeweb, which tumbled nearly 4%. Visa shares also fell by 1.6%.
In a more optimistic light, the market showed resilience on Tuesday, with the Dow gaining 0.8%, or 300 points, while both the S&P 500 and Nasdaq increased by around 0.6%. This volatility creates a challenging environment for investors to navigate, making it crucial to reassess strategies and maintain a close watch on market trends.
Currently, stocks worth monitoring include CrowdStrike, MercadoLibre, Penumbra, and Guidewire, each exhibiting noteworthy movements in the current market climate. Boeing is particularly interesting as it approaches a buy point from a double-bottom formation, despite slipping nearly 2% on Wednesday.
As the market continues to experience fluctuations, investors would benefit from focusing on strong, resilient companies capable of navigating this uncertainty, while also keeping an eye on economic indicators that could further influence market dynamics.
