Nasdaq 100, Dow Jones, S&P 500 News: Salesforce 20% Plunge Weighs on Tech Sector

U.S. Stock Indexes Decline on Slower Economic Growth

U.S. stock indexes are down at the mid-session on Thursday, driven by a significant drop in Salesforce shares and slower-than-expected economic growth. This decline has fueled speculation about potential interest rate cuts by the Federal Reserve later this year.

At 17:14 GMT, the Dow is trading 38152.94, down 288.60 or -0.75%. The S&P 500 Index is at 5252.70, down 14.25 or -0.27% and the Nasdaq is trading 16830.40, down 90.18 or -0.53%.

Dow Hits Four-Week Low

The Dow Jones Industrial Average hit a four-week low, with Salesforce plunging 20% due to weak client spending on cloud and enterprise products. This decline in Salesforce impacted the broader technology sector, causing the S&P 500 technology sector to drop 1.6%.

Slower Economic Growth

A report from the Commerce Department indicated that the U.S. economy grew at a slower pace in the first quarter than initially estimated. Downward revisions in consumer and equipment spending, coupled with a slight decrease in a key inflation measure, contributed to this slower growth. Weekly jobless claims also rose more than expected, further affecting market sentiment.

Interest Rate Speculation

Following the economic data, U.S. Treasury yields dipped, and the probability of a 25-basis-point interest rate cut in September increased to 52%, according to the CME Group’s FedWatch Tool. This shift in expectations has led investors to focus on sectors that might benefit from potential rate cuts later this year.

Sector Performances

Despite the overall decline, eight of the 11 S&P 500 sectors edged higher, with rate-sensitive real estate stocks gaining over 1%. The small-cap Russell 2000 index recovered 1.1% from the previous day’s drop. However, the benchmark S&P 500 index and the tech-focused Nasdaq both traded at their lowest levels in two weeks and nearly a week, respectively.

Individual Stock Movements

Tesla saw a 0.6% gain after reports suggested the company was preparing to register its ‘Full Self-Driving’ software in China. In contrast, American Eagle Outfitters dropped 3.7% due to lower-than-expected quarterly revenue. Kohl’s slumped 24% after reducing its annual sales and profit forecasts, while Best Buy and HP saw gains of 11.3% and 17.4%, respectively, on better-than-expected earnings reports.

Market Forecast

Given the current economic indicators and market movements, the outlook for the near term appears bearish. The slowdown in economic growth and rising jobless claims suggest potential challenges ahead, although the increased likelihood of interest rate cuts might provide some support to the market. Investors should stay cautious and monitor economic reports and Fed announcements closely.

Technical Analysis

E-mini Dow Jones futures continue to feel downside pressure after breaking the 50-day moving average support earlier in the week. This indicator is now new resistance at 39103.

If the downside momentum continues, a pair of bottoms at 37866 and 37463 will become reasonable targets. The best support remains the 200-day moving average at 37427.