It has been a rough couple of days for markets. In what had been a slow news week up until that point, the FOMC minutes released on Wednesday delivered a sobering dose of reality. The lack of progress on inflation has impressed no one and the board unanimously elected to maintain the current target rate. For all the talk of rate cuts at the start of the year, the fact is that May is already drawing to a close and expectations of monetary easing continue to dissipate.
Stocks took the hawkish stance badly, as did precious metals, but the worst was yet to come. US PMI figures published on Thursday came in much higher than expected. Manufacturing PMI was up to 50.9 from just 50.0 last month, whereas Services grew to a whopping 54.8 from 51.3 on the last publication. Jobless claims, while not falling too far from expectations, also contributed to fears that the US economy is not “cooling off” as previously hoped, further dashing hopes of any interest rate cuts.
The strong rally in Nvidia (NVDA) was not enough to outweigh general market sentiment. The chip maker’s stock gained 9.3% on Thursday following a massive earnings report, convincingly breaking the psychologically important $1,000 level to
close the day at $1,038. Despite this, the Nasdaq Composite closed 0.39% lower after a high market open. The S&P 500 fared worse, losing 0.74% on the day. The Dow Jones was the worst hit of all, closing 1.53% in the red on Thursday, dragged lower in no small part by Boeing (BA) stock crumbling 7.55%. The fall came after the company’s rather blunt admission that the aircraft manufacturer will not generate cash in 2024 and that its deliveries are not set to increase in the second quarter.
The higher rates for longer narrative pushed gold prices almost $100 lower over the last few sessions, XAUUSD falling to $2,328 an ounce on Thursday. The recent rally in silver was also cut short, with prices falling to within touching distance of $30 an ounce, from $32 just two days ago.
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