U.S. Stocks Slump Ahead Of Inflation Data, Salesforce Weighs On Dow

(RTTNews) - After ending Wednesday's session mostly lower, stock saw further downside during trading on Thursday. The major averages all finished the day firmly in negative territory, with the Dow once again falling to its lowest closing level in almost a month.

The Nasdaq and the S&P 500 fell to new lows for the session late in the day but regained some ground going into the close.

The Dow slid 330.06 points or 0.9 percent to 38,11.48, the Nasdaq slumped 183.50 points or 1.1 percent to 16,737.08 and the S&P 500 fell 31.47 points or 0.6 percent to 5,235.48.

A nosedive by shares of Salesforce (CRM) weighed on the Dow, with the cloud-based software company plunging by 19.7 percent to its lowest closing level in over five months.

Salesforce came under pressure after reporting weaker than expected fiscal first quarter revenues and providing disappointing fiscal second quarter guidance.

Concerns about the outlook for interest rates also continued to weigh on the markets ahead of the release of closely watched inflation data on Friday.

The Commerce Department is due to release its report on personal income and spending in the month of April, which includes readings on inflation said to be preferred by the Federal Reserve.

Economists expect consumer prices to rise by 0.3 percent in April, matching the increase seen in March, while the annual rate of consumer price growth is expected to come in unchanged at 2.7 percent.

The data could have a significant impact on the outlook for interest rates, as Fed officials have repeatedly said they need "greater confidence" inflation is slowing before they will consider cutting rates.

On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits crept modestly higher in the week ended May 25th

The report said initial jobless claims rose to 219,000, an increase of 3,000 from the previous week's revised level of 216,000. Economists had expected jobless claims to inch up to 218,000 from the 215,000 originally reported for the previous week.

Meanwhile, the Commerce Department said gross domestic product climbed by 1.3 percent in the first quarter compared to the previously reported 1.6 percent jump.

The downwardly revised increase, which was in line with economists, compares to the 3.4 percent surge in GDP in the fourth quarter of 2023.

A separate report released by the National Association of Realtors showed a sharp pullback by pending home sales in the U.S. in the month of April.

Sector News

Despite the losses posted by the major averages, telecom stocks moved sharply higher on the day, resulting in a 2.9 percent spike by the NYSE Arca North American Telecom Index.

Significant strength was also visible among housing stocks, as reflected by the 2.0 percent jump by the Philadelphia Housing Sector Index.

Gold stocks also turned in a strong performance amid a slight increase by the price of the precious metal, with the NYSE Arca Gold Bugs Index climbing by 1.6 percent.

Commercial real estate, computer hardware and transportation stocks also saw notable strength on the day, while Salesforce led the software sector, resulting in a 4.8 percent plunge by the Dow Jones U.S. Software Index.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both tumbled by 1.3 percent, while China's Shanghai Composite Index decreased by 0.6 percent.

Meanwhile, the major European markets moved to the upside on the day. While the German DAX Index crept up by 0.1 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both climbed by 0.6 percent.

In the bond market, treasuries showed a notable rebound after moving sharply lower over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.0 basis points to 4.554 percent.

Looking Ahead

Reaction to the inflation data and its impact on the outlook for interest rates is likely to be the main driver of trading on Friday.