S&P 500 and Dow fall away from records as Fed cheer fades

By admin On Sep 20, 2024 0

U.S. stocks fell from record highs on Friday as rate cut euphoria faded, with FedEx (FDX) earnings providing a dose of reality.

The S&P 500 (^GSPC) fell about 0.3% after the benchmark index closed at a record high. The Dow Jones Industrial Average (^DJI) traded flat after setting its own record close. Leading the decline were contracts on the tech-heavy Nasdaq Composite (^IXIC), which fell 0.3%.

Stocks rose Thursday as investors welcomed Chairman Jerome Powell's message that the Federal Reserve made a big interest rate cut to support the economy, not save it, a sentiment reinforced by jobless claims data.

That roaring rally is now stalling amid reminders that risks to growth could still exist. Wall Street is still wondering whether the Fed has fallen behind in its task of keeping the economy on track for a “soft landing.” Traders are pricing in deeper cuts this year than policymakers project, according to federal funds futures.

Read more: What the Fed's rate cut means for bank accounts, CDs, loans and credit cards

Moreover, according to a senior Bank of America strategist, Michael Hartnett, the Fed-fueled optimism is fuelling the risk of a bubble. Stocks are pricing in levels of monetary policy easing and earnings growth that are pushing investors to seek profits.

FedEx posted a sharp drop in profit in after-hours trading on Thursday, missing Wall Street estimates. The delivery company, a bellwether for the economy, saw its shares fall as much as 14% in early trading.

Elsewhere, Nike (NKE) shares rose after the sportswear maker named a new chief executive as its sales come under pressure.

Live3 updates

Friday, September 20, 2024 at 8:51 am MDT

Constellation Energy hits all-time high after deal to sell nuclear power to Microsoft

Constellation Energy (CEG) shares rose to all-time highs on Friday after the company announced plans to restart a nuclear reactor at Three Mile Island (TMI) and sell the power to Microsoft for its data centers.

Wall Street had been anticipating that Constellation would sign a deal this year with one of the big tech players as they look for more power to run their technology infrastructures amid an artificial intelligence boom.

Constellation purchased TMI's Unit 1 reactor in Pennsylvania in 1999. It is located next to Unit 2, a reactor that was shut down after suffering a partial meltdown in 1979.

“TMI Unit 1 is a fully independent facility and its long-term operation was not affected by the Unit 2 accident,” Constellation said in its announcement Friday.

Before Unit 1 was shut down for economic reasons in 2019, the plant had a generating capacity of 837 megawatts, enough to power more than 800,000 average homes, the company said.

Constellation Energy rose as much as 15% on Friday. The stock is up more than 100% so far this year.
Friday, September 20, 2024 at 7:46 am MDT

Nike shares rise 7% after CEO replacement

Nike (NKE) shares rose on Friday after the sneaker and sportswear giant announced that its chief executive, John Donahoe, plans to retire. He will be replaced by Elliott Hill, the company's former president of consumer and marketplace, effective Oct. 14.

Wall Street analysts cheered the return of Hill, who left Nike in 2020. The company's shares rose more than 7% in early trading.

As Yahoo Finance's Brooke DiPalma reports, the leadership change comes at a time when Nike's board of directors — which includes founder Phil Knight, former longtime CEO Mark Parker and Apple CEO Tim Cook — sees fit to focus on improving the product and re-establishing relationships abandoned by Donahoe, such as the one with Foot Locker (FL).

Read more here.
Friday, September 20, 2024 at 7:30 a.m. Mountain Daylight Time

Stocks retreat from record highs as Fed rate cut rally fades

Stocks fell slightly in early trading on Friday, pulling away from record highs for the S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI).

The tech-heavy Nasdaq Composite (^IXIC) also fell after a monster rally in the previous session following a massive rate cut by the Federal Reserve.

Market euphoria faded on Friday after delivery giant FedEx (FDX), a bellwether of the U.S. economy, reported disappointing quarterly results on Thursday evening.

FedEx shares fell in early trading.