The Dow Jones Industrial Average recorded its best session of the year on Friday, closing more than 570 points higher as investors wrapped up a robust May. Despite a challenging week for the major indices, which saw the S&P 500 and Nasdaq break their five-week winning streaks, each benchmark managed to secure gains for the
The Dow Jones Industrial Average recorded its best session of the year on Friday, closing more than 570 points higher as investors wrapped up a robust May. Despite a challenging week for the major indices, which saw the S&P 500 and Nasdaq break their five-week winning streaks, each benchmark managed to secure gains for the month. The Dow's impressive rise was driven by significant advances in Salesforce and UnitedHealth, showcasing investor optimism even as the Federal Reserve’s preferred inflation measure came in largely as expected. This end-of-month rally underscores the market's resilience amidst fluctuating economic data and corporate earnings reports.
Key Takeaways:
Dow's Best Day of 2024: The Dow Jones Industrial Average surged 574.84 points, or 1.51%, to close at 38,686.32, marking its best session of the year. This rise was significantly driven by Salesforce, which saw a 7.5% increase, and UnitedHealth, which rose 2.8%.
S&P 500 and Nasdaq Performance: The S&P 500 added 0.80% to finish at 5,277.51. Meanwhile, the Nasdaq Composite experienced a minor decline of 0.01%, closing at 16,735.02. Despite this slight dip, the Nasdaq still posted a 6.88% gain for May, making it the best month since November.
Weekly and Monthly Gains: Despite a challenging week where the S&P 500 and Nasdaq broke their five-week winning streaks, each major index recorded gains for May. The Dow, S&P 500, and Nasdaq increased by 2.3%, 4.8%, and 6.88% respectively, marking a sixth positive month in seven.
Economic Data: The core personal consumption expenditures (PCE) price index, excluding food and energy, increased by 0.2% in April, aligning with economists’ expectations. On a yearly basis, core PCE rose by 2.8%, slightly above the anticipated 2.7%, indicating stable inflationary trends.
European Markets Performance: European stocks closed higher on Friday, with the Stoxx 600 index up 0.28%. For the month, the Stoxx 600 saw a 2.3% increase, its largest gain since March. Euro zone inflation rose to 2.6% in May, slightly above the 2.5% forecast, influencing investor sentiment ahead of the European Central Bank's rate decision. Meanwhile, the U.K.’s FTSE 100 finished up 0.57% with France’s CAC 40 closing 0.03% higher.
Asian Markets Activity: Japan’s Nikkei 225 climbed 1.14% to close at 38,487.9, while the broader Topix index rose 1.7% to end at 2,772.49. South Korea’s Kospi ended flat at 2,636.52, and Australia’s S&P/ASX 200 index increased by 0.96% to close at 7,701.7. Conversely, Mainland China’s CSI 300 index and Hong Kong’s Hang Seng index experienced minor declines of 0.4% and 0.2%, respectively.
US Treasury Yields: The 10-year Treasury yield fell over 5 basis points to 4.501%, briefly dipping below the critical 4.5% mark earlier in the day. Similarly, the 2-year Treasury yield decreased by more than 5 basis points to 4.877%, reflecting market reactions to the Federal Reserve's inflation data, which largely met expectations.
Japan's First Currency Intervention Since 2022: Japan confirmed its first currency intervention since 2022, spending 9.7885 trillion yen ($62.25 billion) between April 26 and May 29 after the yen plunged to a 34-year-low of 160.03 against the US dollar. This intervention, aimed at stabilising the yen, coincided with a rebound to 156 levels.
FX Today:
EUR/USD Remains Steady: The EUR/USD pair rose to 1.0880 following better-than-expected EU HICP inflation data. Despite fluctuating near 1.0850, the pair struggled to gain significant momentum. It remained close to the week's opening bids, reflecting a 2.8% recovery from its last swing low but still down 1.6% from the 2024 opening bids near 1.1035. The pair hovers just above the 200-day EMA at 1.0793, signalling potential bullish exhaustion.
GBP/USD Range-Bound: The GBP/USD pair continued to navigate within a narrow range. After rising sharply since mid-April, it faced resistance near the March 20 peak of 1.2798, failing to break higher. Support levels are seen at 1.2670 and 1.2600, with significant retracement support at 1.2479. The 200-day moving average, located at 1.2538, remains well below the current market levels.
USD/CAD Fluctuates Post-GDP Data: USD/CAD retreated to the 1.3630 region following weaker-than-expected Canadian GDP growth, which came in at an annualised rate of 1.7%, below the forecast of 2.2%. The pair struggled to break past 1.3600, highlighting the delicate balance of forces. The Canadian dollar saw some recovery, trading at 1.3635 per US dollar, as two-year Canadian government bond yields fell 7.5 basis points to 4.3%.
USD/JPY Eyes Higher Ground: The USD/JPY pair continued its upward trajectory, strengthening by 0.27% to 157.24. The pair closed above its 100 and 200-hour moving averages, with resistance levels at 157.71 and 160.23. Support was found at 156.57, 155.55, and 153.62. The Japanese yen's movements followed Japan’s confirmation of its first currency intervention since 2022, spending $62 billion to stabilise the currency.
NZD/USD Consolidates Gains: The NZD/USD pair rose to a high of 0.6160 before stabilizing around 0.6145, entering a consolidation phase. The pair maintains a strong upward trend, supported by the convergence of its 20-day, 100-day, and 200-day SMAs in the 0.6050-0.6100 region. Technical indicators reflect ongoing bullish activity, with any movements below this convergence considered a sell signal.
Crude Oil Declines: WTI crude oil fell to a fresh weekly low of $76.50, marking its second month of losses. Despite an intraday high near $78.40, WTI tumbled after hitting the 200-hour EMA at $78.30. The commodity remains up nearly 8% in 2024 but is down about 12% from the year’s peak above $87.00 set in April.
Gold Posts Monthly Gain: Gold prices eased 0.72% to $2,326.97 per ounce on Friday as investors digested the US inflation report, which aligned with estimates. Despite this, gold remained up 1.8% for May, marking its fourth consecutive monthly gain. The precious metal hit an all-time high of $2,449.89 on May 20, driven by expectations of a Federal Reserve rate cut later this year.
Market Movers:
Salesforce Soars: Salesforce shares surged 7.5% following strong performance, contributing significantly to the Dow's 574.84 point rise. The robust gains underscore Salesforce's influential role in driving the market higher on Friday.
UnitedHealth Climbs: UnitedHealth's stock increased by 2.8%, further bolstering the Dow's exceptional session. The healthcare giant's gains reflect investor confidence in its stable earnings outlook.
Dell Technologies Plummets: Dell Technologies experienced a significant drop, falling 17.87%. Despite reporting strong earnings, concerns over a smaller-than-anticipated AI server backlog weighed heavily on the stock.
Zscaler Jumps: Zscaler's stock rose 9% after the company beat earnings expectations and raised its full-year guidance. The cybersecurity firm reported adjusted earnings of 88 cents per share on revenue of $553 million, surpassing analysts' forecasts of 66 cents on $535 million in revenue.
Gap Soars: Gap's shares soared 29% after the retailer reported better-than-expected results and raised its full-year guidance. The company posted revenue of $3.39 billion, exceeding the forecasted $3.29 billion.
MongoDB Declines: MongoDB fell sharply by 24%, making it the biggest loser in the Nasdaq 100 index. The drop followed the company’s reduction in its full-year earnings guidance, disappointing investors.
Marvell Technology Drops: Marvell Technology saw a decline of 10.46% after reporting revenue and guidance that met market expectations but highlighted concerns over its expensive valuation. The stock’s drop impacted other chip stocks, with Lam Research, Micron, and KLA Corp also closing down by over 1%.
SentinelOne Falls: SentinelOne's shares dipped 13% after issuing a revenue outlook that fell short of analysts' forecasts. The company expects revenue between $808 million to $815 million for 2024, lower than the $817 million predicted by analysts.
VF Corporation Rises: VF Corporation's stock surged 8% after announcing that Sun Choe will take on the role of global brand president of Vans starting in late July. Choe was previously the chief product officer at Lululemon, and her appointment is seen as a positive strategic move for VF Corporation.
Ambarella Surges: Ambarella’s stock soared 21% after the chipmaker announced expectations of continued revenue growth in fiscal 2025, driven by robust demand for artificial intelligence. Despite a first-quarter earnings loss, the company's optimistic outlook boosted investor sentiment.
As May concludes with the Dow recording its best session of the year, investors are navigating a landscape marked by mixed economic signals and significant corporate movements. The robust gains in Salesforce and UnitedHealth propelled the Dow, while the Nasdaq faced pressure from declines in tech giants like Nvidia. Economic indicators, such as the core PCE aligning with expectations and euro zone inflation slightly exceeding forecasts, reflect an optimistic market environment. Despite challenges such as Dell's sharp fall and MongoDB's guidance cut, the resilience shown by key indices and sectors underscores a market set to balance growth opportunities with economic uncertainties as it heads into June.
