5/8/2024

Walt Disney shares fell 9.5%

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Key points:

  • The S&P 500 and Dow Jones rose, the Nasdaq fell.
  • Disney fell 9.5% as its traditional television business and box office revenue fell.
  • Expectations for a Fed rate cut in 2024 remain.

The S&P 500 and Dow Jones Industrial Average indices showed positive dynamics at the end of trading on Tuesday, May 7. A slight but confident increase in their values became the next link in a chain of successive victories, supported by renewed expectations of a reduction in interest rates by the US Federal Reserve this year.

It is worth noting that the Nasdaq Composite index showed a decline.

The S&P 500 rose 6.96 points, or 0.13%, to 5,187.70. The Nasdaq Composite Index fell 16.69 points, or 0.10%, to 16,332.56. The Dow Jones Industrial Average rose 31.99 points, or 0.08%, to 38,884.26.

Disney is falling, Alphabet and Meta are rising

The S&P 500 posted its fourth straight gain, its best performance since March. The Dow Jones Industrial Average is on a streak of five consecutive advances, marking its longest stretch of gains since December 2023.

It is worth noting that these achievements were achieved against the backdrop of a 9.5% decline in Walt Disney shares, the most significant decline since November 2022. The unexpectedly strong performance of the company’s streaming service could not offset the negative impact on the shares of the decline in the traditional television business and the decline in box office receipts.

However, the growth of shares of tech giants Alphabet and Meta Platforms by 1.9% and 0.6%, respectively, were able to support the main indices.

Nvidia shares fell 1.7% after the Wall Street Journal reported that Apple is developing its own chips to run artificial intelligence software in data centers. Apple, having introduced the new M4 chip, however, is introducing them into the iPad Pro model, not the Mac, which led to an increase in the corporation’s shares by 0.4%.

Tesla shares fell 3.8% after data showed an 18% decline in sales of Chinese-made electric vehicles in April compared with the same period last year.

Hopes for Fed rate cuts are returning

In recent weeks, Fed officials have repeatedly expressed their intention to cut interest rates this year, but emphasized the need for a balanced approach to this issue.

Minneapolis Fed President Neel Kashkari suggested that the Fed may be forced to keep rates at current levels through the end of the year due to slowing inflation and the strength of the real estate market.

It’s worth noting that positive payroll and earnings data released on Friday reassured investors who had previously expressed concerns about inflation and economic growth.

The Fed will cut rates by 46 basis points by the end of 2024, according to LSEG forecasts based on traders’ expectations. It is assumed that the first reduction will take place in September, and the second in December. Before last week’s labor market report, only one rate cut was forecast.

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