Wall Street Slips, Trimming Gains for May

Wall Street

U.S. stocks retreated on Wednesday, scaling back gains that had put May on track to be Wall Street’s best month in six.

The S&P 500 fell 0.8% in early trading, moving further from its recent record high. The Dow Jones Industrial Average dropped 427 points, or 1.1%, at 9:35 a.m. Eastern time, and the Nasdaq composite declined 0.7% after reaching an all-time high.

Airline stocks led the downturn, with American Airlines Group slumping 13% after cutting its spring profit forecast and other financial targets. The company cited lower-than-expected revenue trends and announced the departure of its chief commercial officer, Vasu Raja.

ConocoPhillips fell 2.8% after announcing an all-stock deal to buy Marathon Oil, valued at $22.5 billion, including $5.4 billion of net debt. This is the latest in a series of significant industry buyouts. Marathon Oil shares rose 9.2%.

Advance Auto Parts plunged 12.3% after its quarterly results and revenue missed analysts’ expectations, attributing the shortfall to a slower-than-expected start to the year for the industry.

Longer-term Treasury yields ticked higher, weighing on the broader stock market. The 10-year yield rose to 4.58% from 4.54% late Tuesday, though it remains down for the month after dipping below 4.40% in mid-May.

Traders are adjusting their expectations for when the Federal Reserve might start cutting its main interest rate, currently at a two-decade high. Wall Street favors rate cuts as they can boost investment prices and alleviate economic pressure. However, persistent inflation has repeatedly delayed these hopes.

The Fed aims to curb inflation through high interest rates without triggering widespread layoffs. Despite concerns about high rates, the U.S. stock market continues to set records, driven by gains in artificial-intelligence technology stocks. Nvidia, after a strong profit report, saw its stock dip 1.4%, its first decline since the report.

Meanwhile, Dick’s Sporting Goods surged 12.1% after exceeding profit and revenue expectations and raising its full-year profit forecast. Chewy, an online pet supplies retailer, reported stronger-than-expected profits, sending its stock up 20.2%. The company also announced a $500 million share buyback plan.

Internationally, most stock indexes in Asia and Europe declined. Hong Kong’s Hang Seng dropped 1.8%, South Korea’s Kospi fell 1.7%, and France’s CAC 40 decreased 1.5%. Shanghai stocks were flat following the International Monetary Fund’s upgraded forecast for China’s economy, predicting a 5% growth rate for this year, but noting the need for consumer-friendly reforms to maintain high-quality growth.

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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.