On Tuesday, the Nasdaq and the Dow exhibited divergent trajectories early in the session but ultimately delivered a mixed performance as the trading day progressed.
While the Nasdaq briefly dipped into negative territory during the afternoon, joining the Dow, it subsequently rebounded, closing the day at a new record high. Specifically, the Nasdaq rose by 99.09 points, or 0.6%, reaching 17,019.88, continuing its strong performance from the previous Friday. The S&P 500 also edged up by 1.32 points, or less than 0.1%, to 5,306.04, whereas the Dow saw a significant drop of 216.73 points, or 0.6%, settling at 38,852.86, extending its decline from last week.
Nvidia (NVDA) played a crucial role in the Nasdaq's continued ascent, with its shares soaring by 7.1% to a record high. Nvidia had recently reported better-than-expected fiscal first-quarter results and offered optimistic guidance. Additionally, the company announced a ten-for-one stock split and increased its quarterly cash dividend by 150% to $0.10 per share.
However, the Nasdaq faced some afternoon volatility as the ten-year Treasury yield surged above 4.5% following lukewarm demand for two-year and five-year notes at auction.
Meanwhile, a sharp decline in Merck (MRK) shares cast a shadow over the Dow. The pharmaceutical giant's stock plummeted by 2.6%, marking its lowest closing level in over a month.
Overall, trading activity remained somewhat muted as investors awaited key inflation data scheduled for release later in the week. The Commerce Department is set to publish its report on personal income and spending for April on Friday, which includes inflation metrics preferred by the Federal Reserve. This data could significantly influence expectations for interest rates ahead of the Fed’s next policy meeting on June 11-12.
Minneapolis Fed President Neel Kashkari, in an interview with CNBC, stated that he needs to see "many more months of positive inflation data" before considering any rate cuts. Though not a voting member of the Federal Open Market Committee this year, Kashkari hinted he could not rule out raising rates if inflation remains stubbornly high.
In other economic news, the Conference Board released a surprising report showing a significant uptick in consumer confidence for May. The consumer confidence index jumped to 102.0 from a revised 97.5 in April, defying economists' expectations of a decline to 95.3.
Sector Highlights
Airline stocks were notably weak, leading the NYSE Arca Airline Index to fall by 2.0% to its lowest closing level in over four months. Housing stocks also faced considerable pressure, reflected in a 1.3% decline in the Philadelphia Housing Sector Index.
Healthcare and pharmaceutical stocks experienced notable weakness, whereas gold stocks moved strongly higher alongside the price of gold, driving the NYSE Arca Gold Bugs Index up by 2.2%.
Oil service stocks climbed significantly thanks to a surge in crude oil prices, resulting in a 1.7% gain for the Philadelphia Oil Service Index. Similarly, semiconductor and computer hardware stocks performed robustly, contributing to the Nasdaq's overall gain.
Global Markets
Overseas, Asia-Pacific markets experienced modest declines. Japan's Nikkei 225 Index decreased by 0.1%, and China's Shanghai Composite Index fell by 0.5%.
European markets also moved lower, with Germany's DAX Index declining by 0.5%, and both the U.K.'s FTSE 100 Index and France's CAC 40 Index posting losses of 0.8% and 0.9%, respectively.
In the bond market, treasuries turned sharply negative. Consequently, the yield on the benchmark ten-year note rose by 7.5 basis points to a nearly one-month closing high of 4.542%.
Upcoming Events
Looking ahead, the U.S. economic calendar is relatively light for Wednesday. However, the Fed's Beige Book release may garner some investor interest later in the trading day.
