✅ Written by Austin DeNoce, Markets Reporter, Walk-On Holdings

✅ Edited by Casimir Stone, Creative Director Walk-On Holdings

Market Jitters: Fed Signals, Record Highs, and AI Surge Define a Volatile Week

This week in U.S. markets, all three major indexes notched fresh record highs. The Dow and the S&P 500 retreated lower to close out the week, but the Nasdaq Composite maintained its record high off the back of Nvidia gains.

The week was marked by mixed signals from the Federal Reserve. On Monday, Fed Governor Christopher Waller said he doesn’t think additional interest hikes will be necessary, but would like to see several more months of positive inflation data before cutting. However, on Wednesday, the minutes from the central bank’s most recent meeting showed many committee members were worried about the lack of progress on inflation and expressed a “willingness” to tighten policy further should inflation persist. The news weighed on markets as interest rate expectations adjusted, now pricing in just one cut in 2024.

In economic news, both the services and manufacturing PMI gauges for May came in higher than expected, showing an expansion in both sectors. The manufacturing sector has expanded every month in 2024. Durable goods orders were also higher than expected in April, rising 0.7% for the month, compared to the 1% decline projected. Elsewhere, unemployment claims from last week came in lower than anticipated, after surprising to the upside the previous two weeks. However, continuing claims saw a modest increase to their highest level in more than a month. 

In the housing sector, existing home sales declined nearly 2% in April to the lowest level in three months, but remained notably higher than the multi-year low made in October. The 30-year mortgage rate also declined to 7.01% last week, its lowest level since early April. Meanwhile, new home sales fell 4.7% in April, more than expected. Building permits also slid by 3%, hitting their lowest level since December 2022.

In company news, shares of chipmaking giant NVIDIA surged to a record high after beating earnings and sales estimates with a 427% increase in its data center business, forecasting continued demand for its AI chips, and announcing a 10-for-1 stock split. In other AI news, Microsoft announced new PCs powered by advanced chips and geared toward running AI, while Wall Street Journal-owner News Corp partnered with OpenAI to display its content within ChatGPT. 

Elsewhere, Eli Lilly’s stock pushed to a record high, as the pharmaceutical giant’s diabetes drug received approval from Chinese regulators and it announced a $5.3 billion investment in its weight-loss drug manufacturing capabilities. BuzzFeed’s stock soared after former presidential candidate Vivek Ramaswamy bought a nearly 8% stake and announced plans to improve the struggling media company’s business strategy. 

But it wasn’t a banner week for every public company. Target shares tumbled after missing earnings estimates due to softer discretionary spending trends. Earlier in the week, the retailer also announced it would lower prices on some 5,500 frequently bought items to attract more customers. In the banking sector, JPMorgan CEO Jamie Dimon suggested his retirement could be less than five years away, a marked departure from previous comments. In the entertainment space, the U.S. Justice Department sued Ticketmaster-owner Live Nation over alleged antitrust violations. Finally, after burning through $4 billion last quarter, Boeing said it will likely be cash-flow negative this year and could burn the same amount or more this quarter, sending its stock and the overall Dow Jones Industrial Average lower to end the week.