Traders work on the floor at the New York Stock Exchange on March 5, 2024.
Brendan Mcdermid | Reuters
Stocks fell Thursday, as shares of Salesforce headed for its worst day in around two decades on a quarterly revenue miss and soft guidance. Traders also looked ahead to the release of key U.S. inflation data.
The Dow Jones Industrial Average slid 308 points, or 0.8%, weighed down by Salesforce. The S&P 500 lost 0.3%, while the Nasdaq Composite dipped 0.7%.
Salesforce plunged more than 21% after missing revenue expectations for the fiscal first quarter and providing a weak outlook, on track for its worst session since 2004. Artificial intelligence darling Nvidia also slid more than 2%, flirting with its first negative session following its blockbuster earnings report last week.
Those drops dragged on the the major indexes given the companies’ weight in the market, masking strength elsewhere. For example, though the S&P 500 as a whole decreased, more than 300 member stocks were poised to see gains. Meanwhile, the small cap-focused Russell 2000 traded up around 1%.
Thursday’s moves come amid a tough, holiday-shortened trading week. The S&P 500 has slipped around 1.3%, while the Nasdaq Composite has shed 1% — putting both on track to snap five-week winning streaks. The Dow has tumbled more than 2%, on pace for its second straight losing week.
“At this point, we’re kind of in that one step forward, one step back kind of mentality,” said Jason Heller, executive vice president at Coastal Wealth. Following recent all-time highs, traders are “taking some risk off the table.”
An uptick in the 10-year Treasury yield has hurt investor sentiment this week. Higher yields can be bad news for stock investors, as they reduce the multiples traders are willing to pay for equities and make safer investments, such as Treasury bills and money market funds, more attractive. While the yield slipped back below 4.6% on Thursday, it remained above the 4.5% level, which is considered troublesome for stocks.
Despite the rocky week, the indexes are all on track to end the trading month, which also concludes with Friday’s closing bell, higher. The Nasdaq Composite and S&P 500 have jumped more than 7% and 4%, respectively, in May. The Dow has risen just 0.8% in the month. All three indexes hit record highs in May.
Investors should expect continued choppiness in the market as questions swirl around the health of consumer spending and path of interest rates, said Clark Bellin, chief investment officer at Bellwether Wealth. He likened recent market action to a wave coming in before going back out.
“We still have some good excitement that’s been built up in the market — a lot of this is momentum investing,” Bellin said. “But momentum investing works until it doesn’t.”
Investors are looking toward Friday’s release of the personal consumption expenditures price index report for April, which is the Federal Reserve’s preferred inflation gauge. Inflation is expected to come in at 2.7% for April, according to the Dow Jones estimate, still above the central bank’s 2% target.
