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Nasdaq, S&P 500 End Choppy Trading Day At New Record Closing Highs

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May 21 2024 4:35PM

Following the mixed performance seen in the previous session, stocks showed a lack of direction throughout much of the trading day on Tuesday. Despite the choppy trading on the day, the S&P 500 and the Nasdaq reached new record closing highs.

The major averages spent the day bouncing back and forth across the unchanged but moved to the upside going into the close. The S&P 500 climbed 13.28 points or 0.3 percent to 5,321.41, the Nasdaq rose 37.75 points or 0.2 percent to 16,832.62 and the Dow edged up 66.22 points or 0.2 percent to 39,872.99.

The lackluster performance on Wall Street came as traders took a step back to assess the recent strength in the markets.

Renewed confidence the Federal Reserve will lower interest rates in the coming months has contributed to the advance, but recent comments from Fed officials have once again created some uncertainty.

While the likelihood rates will be lower by September remains high, the chances have fallen to 78.3 percent from close to 90 percent last week, according to CME Group’s FedWatch Tool.

Another quiet day on the U.S. economic front may also have kept some traders on the sidelines ahead of the release of the minutes of the Fed’s latest monetary policy meeting on Wednesday.

The minutes of the April 30-May 1 meeting may shed additional light on Fed officials’ thinking with regard to the outlook for rates.

Among individual stocks, shares of Peloton Interactive (NASDAQ:PTON) moved sharply lower after the
exercise equipment and media company announced a global refinancing that includes an offering of $275.0 million worth of convertible senior notes due 2029.

Auto parts retailer AutoZone (NYSE:AZO) has showed a notable move to the downside after report better than expected fiscal third quarter earnings but weaker than expected revenues.

On the other hand, shares of XPeng (NYSE:XPEV) surged after the Chinese electric vehicle maker reported fiscal first quarter results that beat analyst estimates on both the top and bottom lines.

Sector News

Reflecting the lackluster performance by the broader markets, most of the major sectors ended the day showing only modest moves.

Airline stocks showed a significant move to the downside, however, with the NYSE Arca Airline Index falling by 1.8 percent.

Notable weakness was also visible among networking stocks, as reflected by the 1.2 percent loss posted by the NYSE Arca Networking Index.

The index pulled back off its best closing level in over three months amid a steep drop by Palo Alto Networks (NASDAQ:PANW), which came under pressure after the cybersecurity company forecast fiscal fourth quarter revenues and billings toward the low end of analyst estimates.

On the other hand, tobacco and banking stocks saw some strength on the day, driving the NYSE Arca Tobacco Index and the KBW Bank Index up by 1.3 percent and 1.1 percent, respectively.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index and China’s Shanghai Composite Index dipped by 0.3 percent and 0.3 percent, respectively, while Hong Kong’s Hang Seng Index dove by 2.1 percent.

The major European markets also moved to the downside on the day. While the French CAC 40 Index slid by 0.7 percent, the German DAX Index and the U.K.’s FTSE 100 Index edged down by 0.2 percent and 0.1 percent, respectively.

In the bond market, treasuries regained ground following the pullback seen over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slipped 2.3 basis points to 4.414 percent.

Looking Ahead

The minutes of the Fed’s latest monetary policy meeting are likely to be in focus on Wednesday, while a report on existing home sales may attract attention earlier in the trading day.

Nonetheless, trading activity may remain somewhat subdued ahead of the release of quarterly results from Nvidia (NASDAQ:NVDA) after the close of trading.