Stock rally stumbles as consumer sentiment slides to 6-month low

May 10, 2024

5 minutes read

US stocks lost steam in mid-morning trading on Friday after consumer sentiment hit a six-month low.

The Dow Jones Industrial Average (^DJI), which is eyeing its eighth straight win, clung to gains of roughly 0.2%, with the benchmark S&P 500 (^GSPC) hovering above the flatline on the heels of closing above 5,200 for the first time in a month. The tech-heavy Nasdaq Composite (^IXIC) declined around 0.1%.

The latest University of Michigan consumer sentiment survey released Friday revealed a 13% drop in overall sentiment during the month of May. The index reading for the month came in at 67.4, its lowest level in six months, and well below economist expectations of 76.2.

The drop in sentiment comes as investors debate the future of interest rate cuts amid recent signs of a cooling labor market.

Given that, investors will listen closely to speeches from a packed lineup of Fed speakers on Friday for more insight into timing, pace, and chance of an easing in policy. Michelle Bowman, Neel Kashkari, and Austan Goolsbee are among those scheduled to appear.

Earlier, Atlanta Fed boss Raphael Bostic said he sees a single rate cut late this year but echoed fellow official Mary Daly’s preference for waiting for a more robust signal that price pressures are easing.

On the corporate front, TSMC (TSM) shares popped after the Taiwanese contract chipmaking giant said its sales jumped 60% in April. It credited sustained AI demand paired with a revival in consumer electronics such as smartphones.

Live7 updates

Fri, May 10, 2024 at 5:35 PM GMT+1

Chinese EV stocks turn lower on Biden tariff plan

US-listed Chinese electric vehicle makers like Nio (NIO), Li Auto (LI), and Xpeng (XPEV) saw shares drop on Friday following news that President Biden is set to unveil tariffs on China strategic industries, including EVs, batteries and solar cells.

Existing tariffs will be maintained with an announcement expected to come as soon as next week, according to Bloomberg.

A separate report from the Wall Street Journal said the administration plans to “roughly quadruple” the levy.

The development comes ahead of a critical election year with China’s economic strength in focus.

Biden said last month he would impose 25% tariffs on Chinese steel and aluminum. Trump has vowed to hit Beijing with a 60% levy on all Chinese imports if he were to be reelected.

“Instead of correcting its wrong practices, the United States continued to politicize economic and trade issues,” Lin Jian, a ministry spokesman, said on Friday. “To further increase tariffs is to add insult to injury.”
Fri, May 10, 2024 at 4:50 PM GMT+1

Stock rally falters amid double-digit drop in consumer sentiment

US stocks lost steam in early afternoon trading on Friday after consumer sentiment hit a six-month low.

The Dow Jones Industrial Average (^DJI), which is eyeing its eighth straight win, clung to gains of roughly 0.1%, with the benchmark S&P 500 (^GSPC) hovering above the flatline on the heels of closing above 5,200 for the first time in a month. The tech-heavy Nasdaq Composite (^IXIC) declined around 0.2%.

The latest University of Michigan consumer sentiment survey released Friday revealed a 13% drop in overall sentiment during the month of May. The index reading for the month came in at 67.4, its lowest level in six months, and well below economist expectations of 76.2.
Fri, May 10, 2024 at 4:05 PM GMT+1

Stocks trending in early trading: Novavax, TSM, Nvidia

Here are the stocks on Yahoo Finance’s trending ticker page early Friday:

Novavax (NVAX): Shares of the the pharmaceutical company soared more than 130% on Friday after it said it reached a $1.4 billion deal with French company Sanofi to co-commercialize its current COVID-19 vaccine worldwide.

Taiwan Semiconductor Manufacturing Company (TSM): Shares climbed on Friday, up about 5%, after the chipmaker said its April sales surged 60% year over year, signaling lasting demand for AI-powered chips. TSM is a key supplier for tech titans including Nvidia (NVDA), and AMD (AMD), which rallied on the heels of the TSM’s results.

SoundHound (SOUN): Shares of the artificial intelligence company jumped more than 15% after it posted revenue growth of 73% in the first quarter and boosted its full-year revenue outlook for 2024. The company’s CEO Keyvan Mohajersaid said voice AI is quickly becoming a must-have tool for customer service.

Sweetgreen (SG): Shares surged 40% on Friday after the fast-casual salad chain reported first quarter earnings that beat expectations and also boosted its full-year outlook on higher menu prices. Same-store sales climbed 5% in the quarter amid those higher prices with the company also touting its new steak offering, which was officially added to menus on May 7.
Fri, May 10, 2024 at 3:19 PM GMT+1

Consumer sentiment tumbles in May as inflation, interest rate worries take hold

Americans are becoming increasingly worried about sticky inflation and the prospect of high interest rates for longer than initially hoped.

The latest University of Michigan consumer sentiment survey released Friday revealed a 13% decline in overall sentiment during the month of May. The index reading for the month came in at 67.4, its lowest level in six months, and well below economist expectations for a reading of 76.2.

Year-ahead inflation expectations hit 3.5% in Friday’s report, up from 3.2% in the month prior. Longer-run inflation expectations rose to 3.1%, up from 3% the month prior.

“While consumers had been reserving judgment for the past few months, they now perceive negative developments on a number of dimensions,” Survey of Consumers director Joanne Hsu said in a statement. “They expressed worries that inflation, unemployment and interest rates may all be moving in an unfavorable direction in the year ahead.”
Fri, May 10, 2024 at 2:31 PM GMT+1

Stocks open higher; Dow aims for its 8th straight day of gains

Stocks opened higher on Friday, with the Dow Jones Industrial Average (^DJI) looking to end the week with its eighth straight win following a particularly sluggish April for markets.

At the opening bell, the Dow rose roughly 0.2%, and the benchmark S&P 500 (^GSPC) gained about 0.3% on the heels of closing above 5,200 for the first time in a month. The tech-heavy Nasdaq Composite (^IXIC) also jumped around 0.2%.

The benchmark 10-year Treasury yield (^TNX) rose about 4 basis points to trade near 4.49%.

The gains come as investors appear more confident the Federal Reserve could cut interest rates sooner than expected after an April jobs report pointed to signs of a cooling labor market.

A slew of Fed speakers on the docket Friday could offer more clarity on the path forward for interest rates. Michelle Bowman, Neel Kashkari, and Austan Goolsbee are all scheduled to appear.
Fri, May 10, 2024 at 12:37 PM GMT+1

Travel trends

Citi doing a little earnings call mining today, pointing out these notes from AirBNB’s (ABNB) call this week:

“Nights booked in Paris during the Summer Olympics are 5x higher than this time last year while Germany is seeing a similar trend for the Euro Cup this summer with nights booked nearly 2x vs. last year.”
Fri, May 10, 2024 at 10:05 AM GMT+1

Morning markets stats to know

The feel-good vibe in markets marches on, and the happiness is starting to compound.

The S&P 500 remains on track for a third consecutive weekly gain for the first time since February. What’s more, as Deutsche Bank points out, this has been the strongest performance over six sessions for the benchmark index this year so far. The S&P 500 has rallied a solid 3.9% since its recent low on May 1.