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Stocks fall as record recovery cools
U.S. stocks fell on Friday, signaling a pullback from all-time highs, as European turmoil rattled nerves and Elon Musk’s pay package victory boosted Tesla (TSLA) center stage.
The Dow Jones industrial average (^DJI) sank about 0.5% to lead the declines, while the S&P 500 (^GSPC) fell 0.4%. The high-tech Nasdaq Composite (^IXIC) fell 0.3%.
Stocks Are Losing Momentum After Benchmark S&P 500 and Nasdaq record set closes for the fourth consecutive day, driven by the strength of the technicians. Both indices are still on track for weekly gains.
A surprise cooling in wholesale price pressures gave heart to investors betting on two interest rate cuts this year, as the decline will likely be reflected in the next PCE inflation reading observed by the Federal Reserve.
See more information: How does the job market affect inflation?
But the Fed this week scaled back projected rate cuts from three to one in 2024, keeping the market guessing and leaving stocks vulnerable to mood swings. Strength in technology names has driven broader gains, setting up the S&P 500 and Nasdaq for weekly wins — for now, at least. But the Dow faces a loss for the week as doubts persist about the extent of this year’s rally.
Meanwhile, Tesla shares rose about 2% on Friday morning after shareholders reapproved CEO Elon Musk’s salary package. Despite opposition from some large investors, 77% of the votes were in favor, the EV maker said.
Weighing spirits was a fall in European shares (^STOXX), which were heading towards the worst week since October. Investors are worried about the consequences for markets if the far right makes political gains or even wins early elections in France.
On individual movers, Adobe (ADBE) shares jumped 15% after a optimistic AI sales projection from the creator of Photoshop.
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- Friday, June 14, 2024 at 4:20 pm GMT+2
Stock trend in morning trading
Here are some of the stocks leading Yahoo Finance trend tickers page during Friday morning trading.
Adobe (ADBE): The software company’s shares rose 15% following the report fiscal second quarter earnings which exceeded expectations and boosted guidance for the year. A more optimistic outlook for sales of your creative products suggests increasing adoption of the company’s new AI tools.
GameStop (GME): Meme shares rose nearly 3% on Friday morning, building on the previous session’s momentum after Keith Gill, the folk hero retail trader, shared a screenshot of an account which showed a large increase in its position in GameStop. The image appeared to show more than 9 million GameStop shares, up from Monday’s 5 million shares of a similar screenshot the account posted on Reddit.
Shopify (PURCHASE): Shares of the e-commerce company rose 3% following an analyst upgrade that implied a 16% rise in the share price. Evercore ISI Analyst Mark Mahaney Updated Shopify from In-Line to Outperform after the stock pullback created an entry point for investors.
Zscaler (ZS): The cloud security company rose nearly 2% after an update from JPMorgan. Analysts said Zscaler is a “next generation” security company poised for growth that is currently trading at a discount. JPMorgan upgraded the stock to Overweight from Neutral.
RH shares plunge after retailer posts bigger-than-expected loss
HR (HR) shares sank more than 17% on Friday morning after the luxury home goods retailer reported a wider-than-expected loss the day before and said it expected business conditions to remain challenging until rates interest rates decreased and the real estate market recovered.
RH reported a loss of $0.40 per share, wider than analysts’ estimates of a loss of $0.09.
“I don’t think there will be a sustained inflection in luxury home sales at these interest rates,” RH President and CEO Gary Friedman told investors and analysts on the company’s earnings call Thursday, noting that Mortgage rates may not fall significantly. until the next year.
“House prices rose 42% in the two years of COVID and have continued to rise over the past two years. …And now you have interest rates of 7% or more, when they were 2.6% to 3.3%. I mean, now it’s just a question of affordability,” the executive added.
The comments came after the Federal Reserve held interest rates steady this week and signaled it expects just one interest rate cut this year, down from the previous three. The Fed does not directly set mortgage rates, but its policy measures impact them.
The average weekly rate of 30-year fixed mortgage decreased slightly to 6.95% from 6.99% in the previous week, by data from Freddie Mac.
See more information: Mortgage rates hover around 7% – is this a good time to buy a home?
Stocks fall as European markets retreat
US stocks pulled back from all-time highs as investors reacted to nervousness in Europe, where upcoming early elections in France could bring gains for the country’s far-right party.
The Dow Jones industrial average (^DJI) sank about 0.5%, while the S&P 500 (^GSPC) fell 0.3%. The high-tech Nasdaq Composite (^ IXIC) fell 0.2%.
