US equity benchmarks showed little movement on Thursday, hovering close to their historic peaks. Investors carefully weighed a blend of corporate earnings reports and the latest signals from the labour market, all while anticipating a pivotal decision from the Federal Reserve.
Market Indices Hold Their Ground
The benchmark S&P 500 index edged up by 0.1% in early trading, positioning itself a mere 0.5% below its all-time high. The Dow Jones Industrial Average gained 99 points, equivalent to a 0.2% rise. Meanwhile, the technology-heavy Nasdaq Composite index remained largely flat. At the opening bell, the markets had shown modest gains across the board, with the Dow, S&P 500, and Nasdaq all ticking upwards.
Retailers Shine, Tech Stocks Stumble
A clear divergence emerged among individual stocks, heavily influenced by quarterly results. Discount retailers emerged as early winners. Dollar General's stock surged 6.4% after the company reported a stronger-than-expected profit, driven by increased customer footfall. Similarly, Five Below rose 0.8% after surpassing earnings forecasts and providing optimistic guidance for the crucial holiday shopping season.
On the tech front, cloud data platform Snowflake plunged 8.6%, a sharp decline that occurred despite the company beating both profit and revenue estimates. Analysts pointed to slowing growth in its key product revenue segment and the high expectations set after a previous blockbuster quarter. Grocery giant Kroger also faced pressure, slipping 3.8% after its quarterly revenue fell short of market estimates.
Fed Rate Cut Expectations and Labour Market Signals
The overarching market sentiment continues to be shaped by the widespread expectation that the Federal Reserve will implement an interest rate cut next week. This would mark the third reduction this year, as policymakers aim to bolster a job market that shows signs of cooling. Investors generally favour lower borrowing costs as they tend to lift asset prices, though there are concerns that easing monetary policy too aggressively could rekindle inflationary pressures.
Fresh data from the US labour market presented a mixed picture. In a positive sign, new jobless claims dropped to their lowest level in over three years. Furthermore, announcements of layoffs saw a significant decrease from a surge witnessed in October. This encouraging data nudged the yield on the 10-year US Treasury note slightly higher.
Globally, market trends were split. European shares posted modest gains, while Asian markets showed a divided performance. Japan's Nikkei 225 index jumped 2.3%, whereas South Korea's Kospi index experienced a slight decline of 0.2%.
