Wall Street Stocks Soften Amid Signs of Weakening Global Demand
Wall Street stocks softened on Tuesday as investors began the holiday-shortened week by taking profits in the wake of a sustained rally amid signs of weakening global demand.
All three major U.S. equity indexes were red but off session lows, with oil super-majors Exxon Mobil Corp among the heaviest weights. The broad sell-off comes on the heels of the Nasdaq’s longest weekly winning streak since March 2019, and the S&P 500’s longest since November 2021.
Sharp Rise in Market Driven by AI Chatter
As of Friday’s close, the benchmark S&P 500 had advanced 20% in the last twelve months, and over 14% so far this year. Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York, stated that the sharp rise in the market has been driven by AI chatter, which has helped the big tech companies.
Investors now look to Powell’s two-day monetary policy testimony before Congress, starting with the U.S. House Financial Services Committee on Wednesday. There’s still bearish speculation that the Fed is going to stay higher for longer and won’t lower rates any time soon, Ghriskey added.
Concerns Over Slowing Global Demand
Concerns over slowing global demand loomed larger after China cut its lending benchmarks to jump-start sluggish demand, which offset a 21.7% surge in housing starts, the largest monthly jump in thirty years.
Energy shares plunged by 2.4%, with signs of weakening Chinese demand sending crude prices sliding. Electric vehicle rivals Rivian Automotive Inc and Tesla Inc rose 3.1% and 3.9%, respectively, after Rivian announced it had agreed to adopt Tesla’s charging standard.
PayPal Holdings and Nike Updates
PayPal Holdings rose 4.0% after KKR & Co agreed to purchase up to 40 billion euros ($43.71 billion) worth of the payments firm’s “buy now, pay later” loans in Europe. In contrast, Nike slipped 3.5% after Morgan Stanley said it expects margin pressures arising from the company’s inventory glut.
Alibaba, Adobe, and Dice Therapeutics Developments
U.S.-listed shares of Alibaba Group dropped 4.4% after the e-commerce company announced Daniel Zhang would step down from his roles as CEO and chairman to focus on the company’s cloud division. Adobe Inc fell 2.1% after a report that European antitrust regulators were preparing to investigate the firm’s deal to buy cloud-based designer platform Figma. Meanwhile, Dice Therapeutics Inc surged 37.5% after Eli Lilly and Co said it would buy the company in an all-cash deal for about $2.4 billion.