Stock rally stumbles as consumer confidence falls to 6-month low

EleonMay 10, 2024

11 4 minutes read

Stock rally stumbles as consumer confidence falls to 6-month low

U.S. stocks lost strength mid-morning Friday after consumer confidence hit a six-month low.

The Dow Jones Industrial Average (^DJI), eyeing its eighth straight win, held on for gains of around 0.2%, with the benchmark S&P 500 (^GSPC) hovering above the line flat after closing above 5,200 for the first time. in a month. The tech-heavy Nasdaq Composite (^IXIC) was down about 0.1%.

The latest University of Michigan consumer confidence survey released Friday found a 13% decline in overall confidence during the month of May. The index for the month came in at 67.4, its lowest level in six months, and well below economists’ expectations of 76.2.

The drop in confidence comes as investors debate the future of interest rate cuts, amid recent signs of a slowdown in the labor market.

Learn more: How does the labor market affect inflation?

Under these conditions, investors will listen closely to speeches from a large number of Fed speakers on Friday for more information on the timing, pace and chances of policy easing. Michelle Bowman, Neel Kashkari and Austan Goolsbee are among those expected to appear.

Earlier, Atlanta Fed boss Raphael Bostic said he was considering a one-time interest rate cut at the end of this year, but echoed the preference of his colleague Mary Daly of wait for a stronger signal that price pressures are easing.

On the corporate side, shares of TSMC (TSM) jumped after the Taiwanese contract chip manufacturing giant announced its sales jumped 60% in April. He attributes sustained demand for AI coupled with a revival in consumer electronics like smartphones.

Live5 updates

Friday, May 10, 2024 at 11:05 a.m. EDT
Stock trends early in the session: Novavax, TSM, Nvidia
Here are the stocks on Yahoo Finance’s trends ticker page early Friday:
Novavax (NVAX): Shares of the pharmaceutical company soared more than 130% on Friday after it announced it had reached a $1.4 billion deal with French company Sanofi to co-market its current COVID-19 vaccine worldwide.
Taiwan Semiconductor Manufacturing Company (TSM): Shares climbed Friday, up about 5%, after the chipmaker said its April sales jumped 60% year over year, signaling sustainable demand for AI-powered chips. TSM is a key supplier to tech titans including NVIDIA (NVDA)And AMD (AMD)which recovered in the wake of the TSM results.
SoundHound (HER): Shares of the artificial intelligence company jumped more than 15% after reporting 73% revenue growth in the first quarter and improving its full-year 2024 revenue outlook. The company’s CEO , Keyvan Mohajers, said that voice AI is quickly becoming a must-have tool. for customer service.
Soft green (SG): Shares jumped 40% Friday after the fast-casual salad chain reported better-than-expected first-quarter results and also upgraded its full-year outlook on higher menu prices. Same-store sales climbed 5% in the quarter amid higher prices, with the company also touting its new steak offering, which was officially added to menus on May 7.
Friday, May 10, 2024 at 10:19 a.m. EDT
Consumer confidence plummets in May as concerns over inflation and interest rates take hold
Americans are increasingly concerned about persistent inflation and the prospect of high interest rates for longer than initially hoped.
The latest University of Michigan consumer confidence survey released Friday found a 13% decline in overall confidence during the month of May. The index for the month stood at 67.4, its lowest level in six months, and well below economists’ expectations of 76.2.
Inflation expectations for the coming year rose to 3.5% in Friday’s report, up from 3.2% the previous month. Long-term inflation expectations rose to 3.1%, up from 3% the previous month.
“While consumers have reserved judgment in recent months, they now perceive negative developments on a number of dimensions,” Joanne Hsu, director of the Consumer Survey, said in a statement. “They expressed concern that inflation, unemployment and interest rates could all move in an unfavorable direction in the coming year.”
Friday, May 10, 2024 at 9:31 a.m. EDT
Stocks open higher; Dow aims for 8th consecutive day of gains
Stocks opened higher on Friday, with the Dow Jones Industrial Average (^DJI) looking to finish the week with its eighth straight win after a particularly slow April for the markets.
At the opening bell, the Dow rose about 0.2% and the benchmark S&P 500 (^GSPC) gained about 0.3% after closing above 5,200 for the first time. times in a month. The tech-heavy Nasdaq Composite (^IXIC) also jumped about 0.2%.
The benchmark 10-year Treasury yield (^TNX) rose about 4 basis points to trade near 4.49%.
The gains come as investors appear more confident that the Federal Reserve may cut interest rates sooner than expected after an April jobs report highlighted signs of a slowing labor market.
A number of Fed speakers on Friday could offer more clarity on the path forward on interest rates. Michelle Bowman, Neel Kashkari and Austan Goolsbee are all expected to appear.
Friday, May 10, 2024 at 7:37 a.m. EDT
Travel Trends
Citi is making a quick call on mining results today, highlighting these notes from AirBNB’s (ABNB) call this week:
“Nights booked in Paris during the Summer Olympics are 5 times higher than this time last year, while Germany is seeing a similar trend for the European Cup this summer with nights booked almost 2 times compared to last year.”
Friday, May 10, 2024 at 5:05 a.m. EDT
Morning market statistics to know
The feel-good mood in the markets continues and happiness begins to accumulate.
The S&P 500 remains on track for a third consecutive weekly gain for the first time since February. Plus, as Deutsche Bank points out, this is the best six-session performance for the benchmark index so far this year. The S&P 500 has rebounded a solid 3.9% since its recent low on May 1.