Wall Street Drifts Amid Mixed Economic Data and AI Optimism

Wall Street

U.S. stocks fluctuated near record highs on Thursday following mixed economic reports, including an encouraging update on inflation. In early trading, the S&P 500 rose 0.2%, a day after hitting an all-time high, while the Nasdaq composite climbed 0.6%. Conversely, the Dow Jones Industrial Average fell by 149 points. Treasury yields continued to decline, driven by growing confidence that inflation is slowing enough to prompt the Federal Reserve to cut interest rates later this year. Broadcom saw a significant boost, with its stock jumping after the chip company reported better-than-expected profits, largely driven by AI demand.

Market Overview

U.S. markets showed mixed movements early on Thursday, following the Federal Reserve’s decision to keep its benchmark interest rate unchanged after a government report indicated that consumer inflation had cooled more than anticipated in the previous month.

Dow Jones Industrial Average: Futures declined 0.3% before the market opened.

S&P 500: Futures edged up by just over 0.1%.

AI and Corporate Performance

The market’s enthusiasm for AI was evident once again. Broadcom’s shares surged 14.3% in premarket trading after the company exceeded sales and profit targets, fueled by robust AI-related demand. Broadcom’s revenue increased by 43% from the same quarter last year, with AI-related product and service sales reaching a record $3.1 billion.

Tesla shares rose by 6.5% following a social media post by CEO Elon Musk, indicating early shareholder support for restoring his $44.9 billion pay package. This package had been previously denied by a Delaware judge after shareholder litigation. Tesla shareholders are also set to vote on relocating the company’s incorporation from Delaware to Texas.

In contrast, Dave & Buster’s experienced a significant drop, tumbling over 10% in premarket trading after reporting lower-than-expected sales and profits.

Federal Reserve and Inflation

As anticipated, the Federal Reserve kept its main interest rate steady following its latest policy meeting. Treasury yields dropped after a report showed consumer prices had increased by 3.3% over the previous year, slightly less than economists’ expectations of 3.4%.

Lower inflation benefits U.S. households and could lead the Federal Reserve to reduce its interest rate, easing economic pressures and boosting investment prices. Fed Chair Jerome Powell stated that more evidence is needed to confirm inflation is moving towards the 2% target before any rate cuts are made.

Global Markets

Europe: Shares fell sharply as G7 leaders gathered in Italy, addressing global conflicts, AI proliferation, and African issues. The CAC 40 in France dropped 1.2%, Germany’s DAX fell 1.1%, and Britain’s FTSE 100 decreased by 0.4%.

Asia: Investors focused on Japan’s central bank meeting, with the Bank of Japan expected to maintain its current policy despite economic pressure from the strong U.S. dollar. The Nikkei 225 in Japan dipped 0.4%, while Australia’s S&P/ASX 200 rose 0.4%, South Korea’s Kospi increased 1.0%, and Hong Kong’s Hang Seng climbed nearly 1.0%. The Shanghai Composite fell 0.3%.

Energy and Currency

Crude Oil: Benchmark U.S. crude fell by 72 cents to $77.78 a barrel, and Brent crude dropped 63 cents to $81.97 a barrel.

Currency: The U.S. dollar edged up to 157.23 Japanese yen from 156.71 yen, and the euro fell to $1.0784 from $1.0812.

Previous Market Performance

On Wednesday, the S&P 500 gained 0.9%, reaching a new all-time high. The Nasdaq composite rose by 1.5%, while the Dow Jones Industrial Average slipped by 0.1%.

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.