S&P 500 posts first losing day in 3 as Nvidia’s climb fails to lift market, Dow drops 400 points: Live updates

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S&P 500 posts first losing day in 3 as Nvidia’s climb fails to lift market, Dow drops 400 points: Live updates

Stocks slid Wednesday as pressure from rising Treasury yields outweighed a continued rally in artificial intelligence darling Nvidia.

The Dow Jones Industrial Average fell 411.32 points, or 1.06%, to 38,441.54. The S&P 500 dipped 0.74% to 5,266.95, marking its first negative session of the last three. The Nasdaq Composite slipped 0.58% to 16,920.58, as Nvidia’s advance somewhat mitigated losses for the technology-heavy index.

Nvidia climbed 0.8%, reversing an early loss of 2.6%. The megacap tech name has risen every trading session since issuing its blockbuster earnings report last Wednesday. Since then, the stock has surged roughly 21%.

All 11 sectors that comprise the broad S&P 500 retreated, underscoring the breadth of market weakness. More than 440 stocks in the index were lower on the day.

In all, 27 of the 30 stocks in the Dow fell. Insurance provider UnitedHealth led the blue-chip average lower with a slide of more than 3% 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. Higher yields can lower the multiples investors are willing to pay for stocks, drive up borrowing costs, hurt consumer spending and make T-bills and money market funds more attractive.

“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 4.6% in May, while the Dow has advanced about 1.7%. The Nasdaq has climbed more than 8% this month.

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.”

Stocks close lower

S&P 500 posts first losing day in 3 as Nvidia’s climb fails to lift market, Dow drops 400 points: Live updates
Spencer Platt | Getty Images

Traders work on the floor of the New York Stock Exchange on May 16, 2024.

The three major indexes ended Wednesday’s session down.

The Dow finished lower by just over 1%. The S&P 500 shed 0.7%, while the Nasdaq Composite slipped 0.6%.

Alex Harring

Hedge fund exposure to “Magnificent 7” rises to record high

Hedge funds are continuing to add to their bets on Big Tech stocks, according to a note from Goldman Sachs prime brokerage.

“The Magnificent 7 stocks collectively now make up 20.7% of total U.S. single stock Net exposure, the highest level on our record and exceeding the previous peak level of 20% seen last summer,” the note said.

The higher exposure was helped by the recent outperformance of Nvidia, which surged 9% last Thursday on a day when the S&P 500 declined.

— Jesse Pound

Bank of America says investors can ‘continue to put money to work’ in Insmed after trial results for lung disease treatment

Hopes are high on Wall Street for Insmed’s brensocatib, an experimental treatment for patients with a type of chronic inflammatory lung disease.

Analysts rate the stock a buy or outperform across the board and many have said the recently released data from a final-phase trial support the idea that the drug is not only effective for its lead indication, noncystic fibrosis bronchiectasis, but it also could be used for other conditions, including cystic fibrosis, asthma and some types of chronic obstructive pulmonary disease.

Bank of America analyst Jason Zemansky said he would “continue to put money to work” in the stock as there is not sufficient recognition of its opportunities yet.

The stock more than doubled on Tuesday on the trial results, but shares opened lower on Wednesday.

The average price target has moved up to $58.44, according to FactSet, which implies more than 21% upside ahead.

— Christina Cheddar Berk

Equity volatility currently at depressed levels, says Barclays

Recent economic data releases that have eased stagflation concerns may have contributed to equity volatility sinking to near post-Covid lows, according to Barclays head of European equity strategy Emmanuel Cau.

As the market approaches a seasonally low volatility period, equity volatility is likely to remain depressed, Cau wrote in a Wednesday note.

“Importantly, should low vol levels persist, they are likely to lend further support to equities, via potential buying from systematic investors,” said Cau.

The strategist added, “With equities near highs, elevated policy uncertainty and lingering geopolitical risks, we like using extremely low cost of optionality for equity replacement (buying calls or call spreads instead of being outright long equities) or using downside hedges to protect existing longs.”

— Hakyung Kim

Fed reports economy expanded despite concerns over inflation

A woman browses the meat aisle at a supermarket in Montebello, California, on May 15, 2024.
Frederic J. Brown | AFP | Getty Images

A woman browses the meat aisle at a supermarket in Montebello, California, on May 15, 2024.

The U.S. economy grew unevenly over the past six weeks while consumers recoiled against higher prices, the Federal Reserve reported Wednesday.

As part of its periodic “Beige Book” economic look, the Fed noted that the economy “continued to expand” during the period, though “conditions varied” among the 12 central bank districts.

On inflation, the report said prices rose at a “modest” pace while “consumers pushed back against additional price increases, which led to smaller profit margins as input prices rose on average.” Retailers reported offering incentives to shoppers as “price growth is expected to continue at a modest pace in the near term.”

— Jeff Cox

Canaccord Genuity’s Tony Dwyer steps down as chief market strategist

Canaccord Genuity’s Tony Dwyer said Tuesday he is stepping down from his role as chief market strategist at the firm, where he had been since 2012.

“It is with great gratitude that I would like to announce after 14 years with the firm, I have made the decision to step away from my day-to-day role as the Chief Market Strategist at Canaccord Genuity,” Dwyer wrote Tuesday to clients. “I am looking to spend more time with my family and be much more involved in my son’s Health Care-based Software business.”

The strategist said he will remain a market strategy consultant for the firm, a role that will include making keynotes at the firm’s conferences and providing client webinars. Mike Welch will remain at the firm as a market analyst, the note read.

Dwyer, who has been in the industry for 37 years, previously worked at Collins Stewart prior to its acquisition by Canaccord Genuity. At Collins Stewart, he was senior managing director and chief equity strategist.

— Sarah Min

Abercrombie, Netflix and Chewy among stocks making biggest midday moves

The Netflix logo on a laptop in Hastings-on-Hudson, New York, on July 16, 2023.
Tiffany Hagler-Geard | Bloomberg | Getty Images

The Netflix logo on a laptop in Hastings-on-Hudson, New York, on July 16, 2023.

These are some of the companies making headlines in midday trading:

  • Abercrombie & Fitch — Shares popped 22% after the apparel retailer posted fiscal first-quarter sales that grew 22% from a year earlier. Abercrombie’s profit during the period was nearly seven times compared to the year-ago period and came in ahead of Wall Street’s estimates.
  • Netflix — Morgan Stanley reiterated its overweight rating on the streaming stock, leading shares 2% higher. According to the firm, Netflix can see strong double-digit revenue growth that should extend beyond the benefits it is seeing from its paid-sharing initiative.
  • American Airlines — The travel stock sank 14% after a guidance cut for the second quarter. The company said it now sees unit revenues falling as much as 6% during the period compared to a year ago. Prior guidance said the decline would not be greater than 3%.

For the full list, read here.

— Pia Singh

Stocks could be in for a choppy summer, Wolfe Research says

Stocks could be in for a choppy summer even with the major benchmarks on pace to end the month on a high note, according to Wolfe Research.

“While we are not turning intermediate-term bearish, we expect trading to become much choppier over the summer into a combination of softer-than-expected economic readings, reaccelerating inflation surprises, overbought technical conditions, and extended investor sentiment,” chief investment strategist Chris Senyek wrote Wednesday.

Given this, the strategist expects the trend of large-cap tech stocks continuing to outperform will hold. This month, information technology stocks have outpaced all other S&P 500 sectors, up more than 13%. Nvidia alone has advanced more than 30% in May.

“If we’re correct and trading becomes choppier, our sense is that investors are likely to stick with what has worked so far this year,” Senyek wrote. “Said differently, our sense is that the “Mag 7,” Secular Growers, and Momentum stocks will outperform over the summer,” he added.

— Sarah Min

Marathon Oil, a favorite of an AI stock-picking program, surges after deal announcement

Shares of Marathon Oil jumped more than 8% Wednesday after the announcement that ConocoPhillips had agreed to buy the smaller energy company in an all-stock deal.

That big move for the stock is a win for a new artificial intelligence-based investment company. Marathon Oil was the top idea of iFi AI on May 20, with the computer model projecting a 19% upside for the stock over the next 30 days. The stock was little changed in the intervening period before Wednesday’s announcement.

IFi AI, which is powered by IBM’s Watsonx, does take in news for a company as well as company fundamentals and economic data. It is possible that the recent flurry of deal activity in the energy sector contributed to the program’s optimism about Marathon Oil.

The CEO of iFi AI is CNBC senior analyst and commentator Ron Insana. 

— Jesse Pound

BofA upgrades Dick’s Sporting Goods on ‘blowout’ quarter

A shopping cart sits in front of a Dick's Sporting Goods store in Daly City, California.
Kirby Lee | Getty Images News | Getty Images

A shopping cart sits in front of a Dick’s Sporting Goods store in Daly City, California.

Bank of America upgraded Dick’s Sporting Goods to buy from neutral on the back of its “blowout” quarter. It also raised its price target to $240 per share, up from $225, implying 15% upside from Tuesday’s close.

The sporting goods retailer posted an earnings and revenue beat for its fiscal first quarter, with earnings per share coming in at $3.30. Bank of America had estimated earnings per share of $2.85. Dick’s also boosted its full-year earnings per share guidance to between $13.35 and $13.75, up from its prior range of $12.85 to $13.25.

As a result, Bank of America raised its full-year earnings per share estimate to $13.75 from $13.20.

Dick’s “omni-channel execution is well ahead of peers and key brand partnerships are at all-time highs,” analyst Robert Ohmes wrote in a note Wednesday. “DKS is repositioning its retail portfolio to House of Sport stores (+75-100 by 2027) and Next Generation stores (+16 in 2024) which operate at higher sales & profitability levels vs. legacy stores.”

In addition, Dick’s is seeing momentum in its vertical apparel brands Calia, VSRT and DSG, he added.

Shares of Dick’s were up 15% during midday trading.

— Michelle Fox

Decliners swamp advancers in Wednesday’s stock market

More than 82% of all New York Stock Exchange issues are falling Wednesday as decliners swamp advancers 2,291 to 355, according to FactSet data. Similarly, declining volume accounts for nearly 81% of the day’s total trading while advancing volume is just 18.1%.

New NYSE 52-week lows total 78 versus just 30 new 52-week highs.

Over on the Nasdaq, more than 65% of stocks are lower Wednesday, while the declining volume of shares equals some 64% of the total against about 35% of volume advancing. New 52-week lows on Nasdaq overwhelm new highs 126 to 45.

— Scott Schnipper

Dick’s Sporting Goods heads for best day in about 3 years

A postearnings rally in Dick’s Sporting Goods shares put the retailer’s stock on track to notch its best day in about three years.

Dick’s shares jumped more than 16% in late-morning trading during Wednesday’s session. If that holds through session close, it will mark the best day since May 26, 2021, when shares surged slightly under 17%.

The jump follows a better-than-expected earnings report and hiked guidance.

— Alex Harring

Two retailers avoid heavy promotional activity

An Abercrombie & Fitch store in New York.
Stephanie Keith | Bloomberg | Getty Images

An Abercrombie & Fitch store in New York.

Amid all the concerns about the consumer and Americans scrutinizing their spending, two retailers said they are not having to rely on heavy promotional activity to spur sales.

After reporting same-store sales that more than doubled the Street’s expectations, Dick’s Sporting Goods executives told analysts this morning that they “didn’t see an unusually promotional environment in Q1” and that “certainly, the industry overall is in a better place than it was at the end of last year.”

At the same time, Abercrombie & Fitch‘s much stronger-than-expected sales growth figures were not a result of promotions drawing in traffic. Demand has been so strong for the teen retailer’s namesake brand that executives told analysts they “were able to pull back on some promotions and then reduce that clearance selling,” which boosted profit margins in the latest quarter.

Robert Hum

ConocoPhillips agrees to buy Marathon Oil for $17 billion, furthering industry consolidation

ConocoPhillips has agreed to buy Marathon Oil in an all-stock transaction worth $17 billion, bolstering the company’s shale assets as the broader oil and gas industry undergoes a major wave of consolidation.

The deal will add two billion barrels of resources to ConocoPhillips’ inventory in the U.S., extending the company’s reach across shale fields in Texas, New Mexico and North Dakota.

ConocoPhillips’ stock was down more than 3% in morning trading following the announcement as Marathon Oil shares surged more than 8%.

ConocoPhillips’ purchase of Marathon Oil follows blockbuster deals announced last fall by its two bigger rivals, Exxon Mobil and Chevron, as the industry undergoes a transformational wave of consolidation.

The Marathon Oil transaction, which is expected to close in the fourth quarter, would grow ConocoPhillips’ earnings, cash flow and shareholder returns after the deal closes in the fourth quarter, CEO Ryan Lance said. ConocoPhillips expects share buybacks worth $7 billion in the first year after the deal is completed and $20 billion in the first three years.

— Spencer Kimball

JPMorgan CEO Jamie Dimon reiterates succession plan timeline

JPMorgan Chase Chair and CEO Jamie Dimon stood by comments from last week that his retirement from the storied Wall Street firm could be less than five years away.

“[T]he timetable is less than five years, and you know, that could be four, be three, be three and a half, four and a half, it could be two and a half. It’s up to the board,” Dimon said in response to questions at Bernstein’s Strategic Decisions Conference on Wednesday. “The board will decide, we’ve got some great succession. You will know them all. So you should evaluate that yourself.”

— Ritika Shah, Brian Evans

Stocks open lower

Traders work on the floor of the New York Stock Exchange on May 16, 2024.
Spencer Platt | Getty Images News | Getty Images

Traders work on the floor of the New York Stock Exchange on May 16, 2024.

Stocks kicked off Wednesday’s session down.

The Dow slipped 0.9% shortly after 9:30 a.m. ET. The S&P 500 and Nasdaq Composite each slipped 0.7%.

— Alex Harring

It has been a good earnings season for apparel retailers. Abercrombie & Fitch is the latest example, with its outstanding report this morning — and it is a clear sign that the company’s namesake brand is back in favor.

Sales in the latest quarter topped $1 billion, soaring 22% from a year ago, far more than the 15% growth Wall Street expected. The company said it was the highest first-quarter sales it has ever reported, and it blew away the previous record from more than a decade ago.

But here is what’s even more compelling about Abercrombie’s report. While most retailers have given tepid second-quarter guidance over the past couple of weeks, Abercrombie is bucking the trend. The teen retailer is expecting sales to grow at a mid-teens rate in the current quarter, far better than the 9% growth Wall Street has forecast. All this comes before the critical back-to-school selling season in the third quarter.

Robert Hum

See the stocks making premarket moves

Check out some of the companies making headlines before the bell:

  • Dick’s Sporting Goods — The sporting goods retailer popped 7.7% after reporting an earnings and revenue beat for its fiscal first quarter. 
  • Robinhood — The stock broker’s shares jumped 1.6% premarket after the trading startup announced its first-ever share buyback plan.
  • Chewy — The pet supply retailer’s stock popped more than 5% after a stronger-than-expected quarterly report.
  • Cava — The stock fell 5% during premarket trading even though the restaurant chain posted earnings and revenue for the first quarter that topped expectations.

See the full list here.

— Yun Li

Dick’s jumps on better-than-expected earnings and improved outlook

A customer exits a Dick's Sporting Goods in Austin, Texas, on March 7, 2023.
Brandon Bell | Getty Images

A customer exits a Dick’s Sporting Goods in Austin, Texas, on March 7, 2023.

Dick’s Sporting Goods popped more than 7% in premarket trading Wednesday after first-quarter earnings came in strong, with shoppers shelling out for athletic gear and shoes.

The retailer earned $3.30 per share on $3.02 billion in revenue, while analysts polled by LSEG forecast $2.95 a share and $2.94 billion in revenue. Given the strong quarter, the company raised its full-year outlook.

Shares have climbed more than 32% in 2024.

— Alex Harring, Gabrielle Fonrouge

ConocoPhillips in talks to buy Marathon Oil, report says

ConocoPhillips is in talks to take over Marathon Oil in an all-stock deal that values the energy company just north of $15 billion, the Financial Times reported.

The report, which cites people briefed on the matter, said a deal appeared to be imminent late Tuesday, but added there was a chance the talks would fall apart.

Marathon Oil shares jumped 5.8% while ConocoPhillips slipped 0.7%.

— Fred Imbert

Europe stocks open lower

European stocks opened lower on Wednesday, with the Stoxx 600 index 0.2% lower at 8:22 a.m. London time.

France’s CAC 40 index fell 0.35%, Germany’s DAX dipped 0.2% and the U.K.’s FTSE 100 was just below the flatline.

— Jenni Reid

Adani, One97 Communications deny report that claimed Adani is looking to buy a stake in Paytm

A restaurant advertises the use of the Paytm digital payment system in Mumbai, India, on July 17, 2021.
Dhiraj Singh | Bloomberg | Getty Images

A restaurant advertises the use of the Paytm digital payment system in Mumbai, India, on July 17, 2021.

Both Adani Group and Paytm’s parent company, One97 Communications, denied a local media report that Adani is looking to buy a stake in the Indian fintech firm.  

The Times of India reported, citing sources familiar with the matter, that Gautam Adani was looking to buy a stake in Paytm. The report also said Paytm founder and CEO, Vijay Shekar Sharma, met at Adani’s office in Ahmedabad on Tuesday.

One97 Communications called the report “speculative” and said it is not engaged in any discussions on the matter.

“We are denying any such discussions,” an Adani spokesperson told CNBC, regarding talks with Paytm.

Shares of One97 Communications jumped nearly 5% in early trading. Adani Enterprises shares edged 0.2% higher.

— Shreyashi Sanyal, Naman Tandon

Samsung union to stage first strike in company’s history; shares slip 1%

A union at Samsung Electronics announced it will take strike action on June 7, which would be the first time in the company’s history that workers have elected to stop work.

The National Samsung Electronics Union, known as Jeonsamno in South Korea, accounts for about 28,000 workers, or more than one-fifth of the electronics giant’s workforce.

The strike comes amid stalled wage negotiations between the union and the South Korean tech giant, which have been ongoing since January.

Shares of Samsung fell 1.16% on Wednesday.

— Lim Hui Jie

Australian consumer inflation rises more than expected

Pedestrians are seen crossing the street in front of the Westfield shopping mall. Westfield Sydney is Sydney's most convenient shopping destination, located in the heart of the city at Pitt Street Mall.
Md Manik | SOPA Images | Lightrocket | Getty Images

Pedestrians are seen crossing the street in front of the Westfield shopping mall. Westfield Sydney is Sydney’s most convenient shopping destination, located in the heart of the city at Pitt Street Mall.

Official data showed Australia’s consumer prices in April rose 3.6% year on year, more than expectations.

The reading for the weighted consumer price index in April was greater than the forecast 3.4% gain in a Reuters poll. It was also higher than the 3.5% increase in CPI reported for March.

“Inflation has been relatively stable over the past five months, although this is the second month in a row where annual inflation has had a small increase,” said Michelle Marquardt, head of prices statistics at the Australian Bureau of Statistics.

The data showed increases in prices for housing, food and nonalcoholic beverages, alcohol and tobacco and transport as the most significant contributors to the April reading.

— Shreyashi Sanyal

CNBC Pro: ‘Hindenburg Omen’ triggered last week

The major benchmarks hitting all-time highs without broad participation have investors concerned about the health of the rally. However, one technician says poor breadth does not necessarily equate to a weak market.

“If you’re looking at the market, I still think the market appears healthy because the largest names still appear very healthy,” said JC O’Hara, chief technical strategist at Roth MKM. He cited Nvidia’s jump Tuesday, a 6% increase, as an example.

“When that has a big influence on the index, I think the index is fine. It’s just that when you’re a stock picker, your pool of potential candidates for great buying opportunities is shrinking,” he said.

CNBC Pro subscribers can read the full story here.

— Sarah Min

Markets are priced for perfection, Morgan Stanley Wealth Management says

The problem is markets are “priced for perfection.”

That is the view expressed by Morgan Stanley Wealth Management on Tuesday in a 15-page report by Chief Investment Officer Lisa Shalett.

Even when inflation and interest rates come down, their bottom “will remain well above recent business-cycle lows, but this scenario is barely reflected in current market pricing,” according to the report. “With above-average uncertainties, markets priced for perfection, historically rich valuations and apparent investor complacency, we are focused on risk-adjusted returns and have little interest in taking on duration in either stocks or bonds right now,” the arm of Morgan Stanley that services high net worth clients wrote.

Stocks have powered to all-time highs “despite rising uncertainty about economic outcomes, potential policy responses and the upcoming presidential election,” largely driven by rising price-to-earnings multiples investors are willing to pay.

The market is expensive, Shalett wrote. “The forward price/earnings multiple is in the 90th percentile for the last 100 years.” An implied price to earnings of 21 times future earnings on the S&P 500 “is one of the highest forward multiples in the last 35 years, rivals the 2021 high, [and] approaches the all-time high hit in the dotcom bubble,” she wrote.

— Scott Schnipper

Nvidia is $1 trillion larger than all of S&P energy

Want to get a sense of how big Nvidia has become? Let’s put it this way: The chipmaker’s $2.802 trillion market cap is more than $1 trillion larger than that of the entire S&P 500 energy sector. The added market cap of each stock in the sector comes out to about $1.767 trillion.

Nvidia popped 6.98% on Tuesday, hitting a fresh record and building on its surge from last week. Year to date, the stock has jumped 130%. It is up more than 31% just this month.

— Fred Imbert

Stocks open little changed Tuesday evening

Stock futures were mixed Tuesday evening.

Futures tied to the 30-stock Dow slipped 34 points, or nearly 0.1%. S&P 500 futures shed 0.03%, while Nasdaq 100 futures added 0.03%.

— Pia Singh

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