Key points:

  • The S&P 500 and Nasdaq indices corrected slightly after reaching record highs, while the Dow Jones rose.
  • Technology, utilities and industrial stocks pulled markets lower.
  • A weakening US labor market could lead to the Fed cutting rates.

Thursday was marked for American stock indices with a slight retreat from the record levels of the previous day. Under the influence of the upcoming key report on the labor market, the S&P 500 and Nasdaq indices ended trading with minor losses. On the contrary, the Dow Jones index showed slight growth.

The Dow Jones Industrial Average added 0.20% to 38,886.17, thanks to a 78.84-point gain. The S&P 500, on the other hand, suffered minimal losses, falling 0.02% to 5,352.96 points. The Nasdaq Composite lost 0.09% to close at 17,173.12, down 14.78 points.

Nvidia slightly down before stock split

The S&P 500 and Nasdaq hit new intraday records early in the day, but were then pushed back by declines in technology stocks and the utilities and industrials sectors.

The growth leaders were shares of companies from the consumer goods and energy sectors.

Nvidia, ahead of Apple, took the second place in capitalization in the world for one day, but then its shares fell by 1.1%, returning the company back to third place. However, traders are also expecting a 1-for-10 split in Nvidia shares.

So-called “meme shares” of GameStop soared 47% after an influential online investor known as “Roaring Kitty” announced a YouTube livestream for Friday.

At the same time, NIO shares fell 6.8% after the Chinese electric vehicle maker reported a quarterly net loss.

Total trading volume on US exchanges was about 10.4 billion shares, below the average of 12.7 billion over the past 20 trading days.

Upcoming unemployment report

The weekly jobless claims report released earlier was further evidence of a weakening labor market, which could push the Federal Reserve to cut interest rates.

It is worth noting that the European Central Bank has already taken such a step, lowering the interest rate for the first time since 2019.

Rising shares of Nvidia and other artificial intelligence companies have been a key driver of the rally on Wall Street this year. Chipmaker Nvidia’s share accounts for about a third of the S&P 500’s year-to-date gain of more than 12%.

Traders are pricing in a high probability of a Fed rate cut in September (68% according to FedWatch CME) and are expecting two such moves in 2024, according to LSEG.

Experts believe that we are seeing the beginning of a coordinated policy of monetary easing among central banks in the West (with the exception of Japan, which, in contrast, is tightening policy).