Traders work on the floor at the New York Stock Exchange on May 8, 2024.
Brendan Mcdermid | Reuters
Stocks slid Wednesday as rocky trading in artificial intelligence darling Nvidia threatened one of the last few bright spots for traders with Treasury yields ascending.
The Dow Jones Industrial Average fell 380 points, or 1%. The S&P 500 dipped 0.6%, while the Nasdaq Composite slipped 0.4%.
Nvidia traded almost 1% higher, despite flirting with negative territory earlier in the day. The megacap tech name has risen every trading session since its blockbuster earnings report last week, with a cumulative post-earnings surge of nearly 20%.
American Airlines tumbled almost 15% after slashing its sales outlook for the second quarter. Southwest Airlines dipped around 3.5% in sympathy. On the other hand, Dick’s Sporting Goods jumped 16% on the back of strong earnings and raised guidance.
All 11 sectors that comprise the broad S&P 500 traded lower, underscoring the breadth of market weakness. Around 450 stocks in the index were lower on the day.
More than two-thirds of the 30 stocks in the Dow fell. Insurance provider UnitedHealth led the blue-chip average lower with a slide of more than 4% following management commentary around its Medicaid business. Other stocks tied to the federal health insurance program dropped, including Molina Healthcare, Humana and Elevance Health.
Wednesday’s move lower comes as the 10-year Treasury note yield ticked higher for a second day, last trading above 4.6%. The benchmark yield popped to troublesome levels for stock investors following a Treasury Department auction on Tuesday that was met with weak demand.
“Today is really all about interest rates,” said Adam Turnquist, chief technical strategist at LPL Financial, adding that the 10-year and 2-year yields have touched “uncomfortable levels.” “That all is creating some angst among investors.”
While there has been a choppy start to the shortened week, the major averages are on track to close the month with notable gains. The S&P 500 is up almost 5% this month, while the Dow has advanced around more than 1.5%. The Nasdaq has climbed more than 8% in May.
The advances arrive even as traders have lowered their expectations for Federal Reserve rate cuts. Indeed, fed funds futures trading data suggests a nearly 54% chance that rates will hold steady in September, according to the CME FedWatch Tool.
Investors are asking: “What is the summer going to deliver? And is the macro environment really changing?” said Shelby McFaddin, investment analyst at Motley Fool Asset Management. “The year is moving quickly. And some of the things that were expected to happen, the probability of them happening is decreasing.”
Source Agencies
