What happened in the market: 13 May - 17 May 2024

20 May

Aries Yuangga, Wakil Penasihat Berjangka

The week of May 13-17, 2024, was marked by significant movements in the stock market, influenced by a combination of economic data releases, corporate earnings reports, and shifting investor sentiment. Key indicators pointed towards a cooling inflationary environment, fostering optimism among investors about potential Federal Reserve rate cuts later in the year. This article delves into the major events and trends that shaped the markets over the past week, providing a comprehensive analysis of the significant stock movements, economic indicators, and an outlook for the upcoming week.

Last Week at a Glance

Last week, major U.S. equity benchmarks posted mixed results but firm gains overall, buoyed by signs of cooling inflation from a better-than-expected Consumer Price Index (CPI) report, rekindling hopes for potential Federal Reserve rate cuts. The Dow Jones Industrial Average ($DJI) closed above 40,000 for the first time, ending at 40,003.59, up 1.2% for the week, while the S&P 500 index (SPX) continued its upward trend, marking its fourth consecutive weekly advance to 5,303.27, gaining 1.5%. The Nasdaq Composite ($COMP) dipped 12.35 points on Friday, closing at 16,685.97, but still posted a robust 2.1% gain for the week. The 10-year Treasury note yield (TNX) rose to 4.42%, down 8 basis points for the week, and the Cboe Volatility Index (VIX) fell to 11.99, indicating reduced market volatility. Economic indicators included a 0.6% drop in the Leading Economic Index (LEI) to a six-month low, below-expectation housing starts and building permits, and a weak Philadelphia Fed Index. Investor sentiment was largely driven by the interplay between easing inflation and the potential for Fed rate cuts, reflected in the stock market's performance despite mixed economic data.

Top movers & shakers🎢

Several individual stocks made headlines with significant price movements driven by a variety of factors, including quarterly earnings reports, analyst ratings, and strategic announcements. Among the notable movers were:

Nvidia (NVDA): 📉 Dropped 2% on Friday but posted a 2.9% gain for the week. Investors are eagerly anticipating Nvidia's quarterly earnings report, scheduled for Wednesday, seeing the company as a bellwether for the semiconductor industry and tech sector.
Advanced Micro Devices (AMD): 📈 Rose 1.1% on Friday. The surge followed a Reuters report that Microsoft plans to offer AMD's AI chips to its cloud customers as an alternative to Nvidia's, highlighting growing competition in the AI and semiconductor markets.
Coinbase (COIN): 📈 Jumped 4.2% on Friday. The cryptocurrency platform's stock was upgraded by Bank of America from "underperform" to "neutral," citing a positive macro environment for cryptocurrency market-cap appreciation and trading volumes.
Cracker Barrel Old Country Store (CBRL): 📉 Plunged more than 14% on Friday. The significant drop came after the restaurant chain announced a drastic cut in its dividend from $1.30 to $0.25 per share, unsettling investors who rely on the company for dividend income.
DuPont de Nemours (DD): 📈 Rose 3% on Friday. Jefferies Group upgraded DuPont from "hold" to "buy," citing expectations for a "cyclical recovery" in the chemical sector, which boosted investor confidence in the stock.
Reddit (RDDT): 📈 Rallied 10% on Friday. The social media platform announced a partnership with OpenAI, interpreted by investors as a strategic move to enhance its technology offerings and user engagement.
Take-Two Interactive (TTWO): 🎮 Increased by 1.2% on Friday. The video game publisher reported stronger-than-expected quarterly bookings, boosting investor confidence in the company's growth prospects.

The Week Ahead: May 20 - 24, 2024

Looking ahead, the market will be closely watching a series of economic data releases and corporate earnings reports that could influence investor sentiment and market movements.

Key Economic Data Releases

Durable Goods Orders (April): Scheduled for release on Friday, this report will provide insights into the manufacturing sector's health and future business investment trends.
University of Michigan’s Final Index of Consumer Sentiment (May): Also set for release on Friday, this index will offer a glimpse into consumer confidence and spending intentions, which are crucial for economic growth.
Existing Home Sales (April): Data on existing home sales will be released on Tuesday, providing further insights into the housing market's condition.
S&P Global Manufacturing PMI (May): This report, due on Wednesday, will gauge the manufacturing sector's performance and could signal broader economic trends.

Earnings Outlook

Earnings season is nearing its end, but a few major retailers are scheduled to report their quarterly results, which will be closely watched by investors:

Lowe’s (LOW): The home improvement retailer is set to release its earnings on Tuesday. Analysts will be looking for indications of consumer spending trends and the impact of economic conditions on home improvement demand.
Macy’s (M): Also reporting on Tuesday, Macy's results will provide insights into the retail sector's health and consumer behavior.
Target (TGT): Target will release its earnings on Wednesday. As one of the largest retailers, its performance is a key indicator of consumer spending trends.
TJX Companies (TJX): TJX, the parent company of several major discount retailers, will also report its earnings on Wednesday. Investors will be keen to see how the company is faring amid economic headwinds and changing consumer preferences.

Conclusion

In conclusion, the week of May 13-17, 2024, witnessed mixed but overall firm gains in the U.S. equity markets, driven by optimism surrounding cooling inflation and potential Federal Reserve rate cuts. Significant stock movements were observed, influenced by earnings reports, analyst ratings, and strategic announcements. Looking ahead, investors will closely monitor economic data releases and corporate earnings reports, particularly those of major retailers, for further insights into consumer spending trends and the broader economic landscape. Overall, market sentiment remains cautiously optimistic amidst ongoing economic uncertainties and evolving geopolitical dynamics.

Source:

https://www.schwab.com/learn/story/schwab-market-update

https://www.edwardjones.com/us-en/market-news-insights/stock-market-news/stock-market-weekly-update

*Disclaimer:

This information is provided for general information purposes only. Consider your investment objectives, financial resources and other relevant circumstances carefully before investing. This is not an invitation or an offer to invest, nor is it financial advice or a recommendation to buy or sell any investment.