Stocks Slide on Wall Street, Diluting May’s Gains

Wall Street

On Wednesday, the U.S. stock market saw a decline, causing a reduction in gains that were putting May on track to being its best month in half a year.

The S&P 500 dropped by 0.8% during early trading, bringing it further away from its recent record high. By 9:35 a.m. Eastern time, the Dow Jones Industrial Average had fallen by 427 points, or 1.1%, and the Nasdaq composite had lost 0.7% after reaching an all-time high.

Airline stocks led the market’s downward trend, with American Airlines Group experiencing a 13% plunge after decreasing its profit forecast for the spring as well as other financial targets. The company attributed this to  lower-than-expected revenue trends and announced the departure of Vasu Raja, its chief commercial officer.

ConocoPhillips experienced a 2.8% decrease after revealing its plans to acquire Marathon Oil in an all-stock transaction worth $22.5 billion, including $5.4 billion in net debt. This is the most recent in a series of substantial industry acquisitions. Shares of Marathon Oil climbed by 9.2%.

Advance Auto Parts faced a significant decline of 12.3% after its quarterly results and revenue fell short of analysts’ expectations. The company attributed this setback to a slower-than-anticipated start to the year for the industry.

Longer-term Treasury yields experienced an uptick, placing pressure on the wider stock market. The 10-year yield rose to 4.58% from 4.54% on Tuesday evening, despite being lower for the month after falling below 4.40% in mid-May.

Traders are modifying their expectations regarding when the Federal Reserve may begin reducing its benchmark interest rate, which is currently at its highest level in two decades. Wall Street generally welcomes rate reductions because they may boost investment prices and ease economic stress. However, persistent inflation has repeatedly delayed these expectations.

The Fed aims to reduce inflation through high-interest rates without triggering widespread layoffs. Despite concerns over high rates, the U.S. stock market has continued to reach new highs, driven by gains in shares of artificial intelligence technology companies. Nvidia, after a strong earnings report, saw its stock fall by 1.4%, its first decline since the report.

On the brighter side, Dick’s Sporting Goods saw a 12.1% increase after surpassing profit and revenue targets and raising its profit outlook for the full year. Chewy, an online pet supplies retailer, announced stronger-than-anticipated earnings, leading to a 20.2% increase in its stock price. The company also announced a $500 million share buyback program.

Most stock indexes in Asia and Europe followed a downward trend. Hong Kong’s Hang Seng Index declined by 1.8%, South Korea’s Kospi fell by 1.7%, and France’s CAC 40 decreased by 1.5%. Shanghai stocks remained flat after the International Monetary Fund revised its forecast for China’s economy, predicting a 5% growth rate for the year, but emphasizing the need for consumer-friendly reforms to attain high-quality growth.