American investors close the robust stock market week with wariness.
Uncertainty around when the Federal Reserve will start reducing interest rates continues to linger, with US investors hoping for a swift action. However, the central bank has yet to provide any promising signs. This ongoing uncertainty is negatively impacting sentiments on Wall Street.
Following a robust week for the stock markets, US equity investors have held back from making significant investments. The Dow Jones index of blue chips finished the day 0.3% higher at 39,512 points, the S&P 500 inched up 0.2% to 5223 points, while the Nasdaq technology index remained almost unchanged at 16,341 points. Recent economic data suggested that the US labor market was slowing down, sparking speculation of more than one interest rate cut from the Fed in 2023.
However, the exact timeline of these cutbacks remains a mystery. Lorie Logan, a representative from the Fed, warned that the current price pressures were not conducive for rate reduction. As per the futures market, traders are now predicting a rate cut of 45 basis points by the end of 2024, with the initial 25 basis point cut occurring in September.
The optimistic outlook was also dampened by a surprising drop in US consumer sentiment in May. The University of Michigan's consumer confidence barometer plummeted by 9.8 points to 67.4 points. Analysts surveyed by Reuters had anticipated a slight decrease to 76.0 points. Also, looming over the markets is the threat of an intensification in the trade dispute between the US and China.
President Joe Biden is scheduled to announce new tariffs on Chinese products next week, targeting sectors like electric vehicles, solar cells, and steel. It is also expected that tariffs would be imposed on manufactured medical devices, such as syringes and personal protective equipment. The US currency market saw a slight increase, with the dollar index gaining 0.1% to 105.3 points. Shares in Novavax experienced a massive spike of 99% after securing a licensing agreement with Sanofi for its Covid-19 vaccine.
Nvidia Remains Strong in the Face of Adversity
The license agreement with the French company has quelled investors' concerns regarding the company's ongoing viability. Similar to other Covid-19 vaccine suppliers, Novavax has been dealing with the slump in demand due to the pandemic's conclusion. The stocks of Novavax increased by 7.1% due to a more optimistic outlook. Shares in SoundHound AI, an AI voice platform, rose by 7.1% after a more upbeat prognosis. In which, Nvidia, a renowned AI chip manufacturer, holds a stake. This American company posted better-than-expected sales in the first quarter and projected increasing profit margins. In turn, shares in Nvidia rose 1.3%.
At McDonald's, the prospect of measures that could boost business drew investors in. The shares advanced 2.6% after news about the introduction of a five-dollar menu circulated. The aim is to entice more customers in the US. Moderna, on the other hand, lost 4.4% as the decision on the RSV vaccine from US health authorities was delayed.
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Despite the overall market uncertainty, tech giant Nvidia continues to perform well. Its shares inched up 1.3% following better-than-expected sales and projected increasing profit margins. (Nvidia, Wall Street)
Meanwhile, in the fast-food sector, McDonald's saw an investor boost after announcing plans for a five-dollar menu. The shares of the iconic restaurant chain increased by 2.6%. (McDonald's, Wall Street)
Source: www.ntv.de
