US Markets Mostly Lower as Fed Holds Rates Steady
US benchmark indices ended mostly lower on Thursday. The Nasdaq Composite declined 0.3% to 17,691.6, while the S&P 500 slipped 0.2% to 5,662.9. The Dow Jones Industrial Average remained flat at 41,953.3.
Materials led the day’s declines, while utilities and energy sectors posted gains. Market sentiment was affected by former President Donald Trump’s renewed calls for the Federal Reserve to cut interest rates. The Fed opted to keep rates unchanged for a second consecutive meeting, lowered economic growth projections, and signalled increased uncertainty.
US Treasury yields declined, while economic data showed a rebound in home sales and a slight rise in jobless claims, pointing to ongoing labour market strength. Meanwhile, the Conference Board’s Leading Economic Index fell 0.3%, reflecting weaker consumer sentiment and manufacturing orders, though it did not suggest an immediate recession risk.
Corporate Developments and Market Reactions
- Accenture shares dropped 7.3% amid concerns over weaker federal revenue. The company flagged a slowdown in its federal services unit, impacted by delayed and cancelled contracts amid tighter fiscal scrutiny.
- Microchip Technology fell 6.5% after announcing the sale of a wafer fabrication facility.
- Darden Restaurants rose 5.8% following strong financial results.
- Jabil gained 3.1% after raising its full-year outlook.
Global Market Overview
European Markets
European equities declined, with the Eurozone’s STOXX 50 falling 1% and the STOXX 600 down 0.4%, driven by reactions to monetary policy decisions and concerns over the impact of higher deficit spending on growth. Bank and auto stocks led the declines. Major financials such as Intesa Sanpaolo, BNP Paribas, and BBVA dropped nearly 3%. Defence stocks also pulled back following earlier rallies.
Asian Markets
Most Asian equities traded flat to lower on Friday as investors weighed the effects of higher US trade tariffs and interest rates. Chinese stocks pulled back from a stimulus-driven rally. Japanese equities edged higher after stronger-than-expected inflation data raised expectations of further rate hikes. Profit-taking in major Chinese technology firms, particularly in Hong Kong, followed recent gains.
US Futures and Investor Sentiment
US equity futures edged higher overnight, with the S&P 500 on track to end a four-week losing streak. The Dow remained in positive territory, while the Nasdaq Composite was on pace for its fourth consecutive weekly decline. Investor sentiment reflected the Federal Reserve’s rate-hold stance and its signal of future cuts, along with concerns over slower growth and rising inflation.
Currency and Commodity Markets
The US dollar index rose for the third straight session on Friday, nearing 104, as markets assessed the Federal Reserve’s outlook including its signal of two rate cuts this year. The EUR/USD exchange rate traded at 1.0828, as global trade tensions and growth concerns weighed on the euro and other major currencies.
Oil prices rose on Friday, with Brent crude reaching $72.21 per barrel and West Texas Intermediate at $68.32, supported by new US sanctions on Iran and OPEC+’s plan to cut output. Both benchmarks are on pace for their biggest weekly gains since the first week of 2025. However, there are concerns about whether OPEC+ members will adhere to the planned cuts.
Equities on the Move: Company Highlights
- Nike forecast a steeper-than-expected revenue decline in Q4, projecting a mid-teens percentage drop, citing discounts on older products and weak demand in China. Although Nike beat third-quarter expectations, it continues to face challenges in China and Europe during its turnaround under new CEO Elliott Hill.
- Micron Technology projected Q3 revenue above Wall Street estimates, driven by strong demand for high-bandwidth memory (HBM) chips used in AI. The company expects growth in DRAM and NAND demand and a strong fiscal 2025 outlook, despite potential new tariffs from President Trump.
- FedEx lowered its full-year profit and revenue forecasts, citing weak demand and uncertainty in the US industrial economy, with additional pressure from tariffs. The company now expects adjusted profit of $18 to $18.60 per share, and is also contending with rising competition and challenges in the e-commerce and industrial sectors.
- PDD Holdings missed quarterly revenue expectations due to weak Chinese demand, despite stimulus measures and discounts. While competition from Alibaba and JD.com weighed on performance, PDD posted a profit beat supported by strong international growth through Temu and favourable exchange rates. Concerns over US trade policy may affect Temu’s price competitiveness.
- Heathrow Airport experienced major disruption on Friday after a fire at a nearby electrical substation triggered a power outage. At least 1,351 flights were affected globally, with delays expected in the coming days as airlines work to manage the growing backlog.
- Nvidia announced it will open a quantum computing research lab in Boston in partnership with Harvard University, MIT, and firms including Quantinuum and QuEra Computing. CEO Jensen Huang acknowledged previous comments predicting quantum was 20 years away were incorrect, and stated the tech will complement, not replace, classical computing.
- Lyft plans to launch driverless rides this summer, in partnership with May Mobility, Mobileye, and Marubeni. The company aims to integrate autonomous vehicles into its platform alongside human drivers, and will support drivers through training and new job opportunities.
- Tesla is recalling over 46,000 Cybertrucks in the US due to a risk that exterior panels could detach while driving. It marks the eighth recall for the model since January 2024. While it raises quality concerns, analysts expect limited impact on overall sales.
Analyst Ratings and Market Outlook
- Oppenheimer initiated coverage on Lam Research with an Outperform rating and a $950 price target (corrected from $95), citing leadership in etch technology and upside from AI and NAND-related demand. The firm expects strong earnings growth through 2028.
- JPMorgan added SAP to its Positive Catalyst Watch, maintaining an Overweight rating with a €300 price target. Analysts believe strong recurring revenue and AI integration could drive earnings, with a potential bullish case target of €425.
- Freeport-McMoRan was upgraded to Overweight by JPMorgan, with the price target raised to $52. The firm cited US copper tariffs and long-term supply challenges, forecasting strong free cash flow into 2025–2026.
- Cava Group was upgraded to Overweight by JPMorgan, raising the price target to $110. Analysts pointed to strong early free cash flow and expansion potential beyond IPO expectations.
- Piper Sandler upgraded Carvana and ACV Auctions to Overweight due to growth in the used vehicle tech space, while Stellantis and Rivian were downgraded on political uncertainty. The firm reaffirmed long-term value in Tesla, despite trimming its 2025 delivery outlook and price target.
Earnings and Economic Calendar
The economic data calendar is light today. Notable earnings reports expected:
- Meituan
- Carnival Corporation
- Nio Inc.
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