NEW YORK, May 9 — US stock indexes were muted today as a slate of downbeat earnings offset the impact of data that showed US weekly jobless claims rose more than expected, indicating softening labour market conditions.
Initial claims for state unemployment benefits increased 22,000 to a seasonally adjusted 231,000 for the week ended May 4, the Labor Department said. Economists polled by Reuters had forecast 215,000 claims in the latest week.
“Whenever we have an employment number that is weaker and it doesn’t meet our expectations, ironically, that bolsters the markets because the data was in favor of a rate cut rather than a rate hike,” said Peter Andersen, founder of Andersen Capital Management.
Last week, softer-than-expected payrolls numbers had fuelled bets that the Federal Reserve will cut interest rates sometime this year.
Money market traders are pricing in US rate cuts worth 47 basis points (bps) by the end of 2024, according to LSEG’s rate probabilities app, up from 44 bps before the latest jobless claims data.
The data also dragged down yields on 10-year Treasury notes, the benchmark for global borrowing costs, which had risen in the previous session and pressured equities.
This boosted rate-sensitive real estate index that outperformed the S&P 500 sectors. A 12.8 per cent rise in data centre operator Equinix after its first-quarter results also added to gains in the index.
But the cheer was limited as some companies reported disappointing earnings.
Chip designer Arm Holdings fell 5.1 per cent as its full-year revenue forecast came in below expectations. Bigger rival Nvidia slipped marginally.
Warner Bros Discovery slid 1.3 per cent after it reported a larger-than-expected quarterly loss, as its cable TV unit reported a slump in ad sales and the studio segment struggled due to Hollywood strikes and poor sales of “Suicide Squad” videogame.
Roblox slumped 21.5 per cent after the video-gaming platform cut its annual bookings forecast, in a sign that people were dialling back spending amid an uncertain economic outlook and elevated levels of inflation.
At 09:37am ET., the Dow Jones Industrial Average fell 23.23 points, or 0.06 per cent, to 39,033.16, the S&P 500 gained 0.72 points, or 0.01 per cent, to 5,188.01 and the Nasdaq Composite gained 3.76 points, or 0.02 per cent, to 16,306.51.
Robinhood Markets gained 5.4 per cent after the online brokerage beat estimates for first-quarter profit, thanks to robust crypto trading volumes and rate hikes that boosted its net interest revenue.
Airbnb slid 6.7 per cent after the vacation rental company forecast second-quarter revenue below market expectations, stoking fears of slowing growth.
Investors will focus on San Francisco Fed President Mary Daly’s speech later in the day for clues on US rate path.
Boston Fed President Susan Collins yesterday expressed confidence that the current setting of monetary policy will slow the economy in a way she believes will be necessary to get inflation back to the Fed’s 2 per cent target.
Advancing issues outnumbered decliners by a 1.73-to-1 ratio on the NYSE and by a 1.14-to-1 ratio on the Nasdaq.
The S&P 500 posted 14 new 52-week highs and 2 new lows while the Nasdaq recorded 50 new highs and 35 new lows. — Reuters
