The financial markets experienced a noteworthy dip on Thursday, burdened by underwhelming earnings guidance from retail giant Walmart, which in turn weighed heavily on the major stock indices. As trading came to a close, the Dow Jones Industrial Average reported a loss of 450.94 points, translating to a 1.01% decline, settling at 44,176.65 points. Similarly, the NASDAQ Composite fell by 93.89 points or 0.47% to end at 19,962.36 points, while the S&P 500 index decreased by 26.63 points, corresponding to a 0.43% fall, finishing at 6,117.52 points. Walmart's stock took a hit, plunging 6.5%, with Tesla and Amazon also falling more than 1.5%. In contrast, the NASDAQ China Golden Dragon Index posted a gain of 1.6%, with Alibaba soaring by 8.1% and Global Data Inc. surging nearly 13%, although NetEase saw a decline exceeding 2%.
Turning to European markets, the German DAX 30 index slipped by 0.53%, the UK's FTSE 100 index decreased by 0.57%, while the French CAC 40 index managed a slight uptick of 0.15%. Additionally, the Euro Stoxx 50 exhibited a marginal decline, indicating a mixed performance across the region.
In the Asia-Pacific market, the Nikkei 225 index fell more than 1.2%, with South Korea’s KOSPI index down by 0.65%, and Indonesia's Composite Index showing a minor decline of 0.1%.
As for the commodity markets, gold prices experienced a modest increase of 0.22%, reaching $2,939.74 per ounce. Notably, prices escalated to a historic high of $2,954.84 earlier in the trading session before retreating, particularly following the release of U.S. employment data later in the day, resulting in a significant downward trend with prices dipping to a daily low of $2,924.23. In futures, COMEX gold rose by 0.67% to settle at $2,955.80 per ounce.
Oil prices also saw movements, with West Texas Intermediate crude for March delivery gaining 32 cents, a 0.44% rise that brought the price to $72.57 per barrel. Meanwhile, European Brent crude for April saw an increase of 44 cents, or 0.58%, closing at $76.48 per barrel.
On the currency front, the ICE Dollar Index declined by 0.73% by the end of trading, touching a daily low of 106.371 points. Throughout the day, the index maintained a downward trajectory, with significant declines commencing post 10 PM Beijing time. The trading range for the day varied from 107.153 to 106.371 points, breaking below a 100-day moving average that had shifted upwards to 106.448 points, nearing a low of 105.798 points observed in December.
Macro-economic indicators also revealed that initial claims for unemployment benefits in the U.S. saw a modest increase last week. The number of first-time claims rose by 5,000 to 219,000, slightly above the expected figure of 215,000. The four-week moving average stood at 215,300. Furthermore, continuing claims for unemployment benefits rose by 24,000 to reach a total of 1.869 million individuals.
A recent survey indicated a cooling manufacturing outlook in the Philadelphia region. February data demonstrated a significant slowdown in manufacturing growth relative to January, where the Philadelphia Federal Reserve’s business activity index dropped from 44.3 to 18.1, indicating an expansion but at a reduced pace. However, despite lower metrics for new orders, shipments, and employment compared to January, approximately 41% of companies reported an increase in overall activity for the month, though this was down from 51% the previous month. The Federal Reserve noted that the price index climbed to a two-year high, signaling persistent inflationary pressures. Nonetheless, firms remained optimistic about growth in the coming six months, albeit with less certainty than prior months.
In the realm of monetary policy, Federal Reserve Vice Chairman Barr issued a stark reminder about the need for central bank independence and vigilance in monitoring financial risks. In a speech prepared for delivery at Georgetown Law Center, Barr stressed the critical nature of the Fed's independence from political interference to effectively fulfill its mandated duties to the public. He underscored that the Fed's mission is too important to be sidetracked by political disputes. Barr is set to step down as the Fed's Vice Chairman for Bank Supervision on February 28 unless a successor is confirmed prior to that date, adding a layer of uncertainty to proposals that would require the largest U.S. banks to hold more capital as a safeguard against losses. His remarks also highlighted the necessity of addressing ongoing challenges associated with climate risk and non-bank financial entities, while ensuring the credibility of stress testing procedures.
In further commentary on interest rates, Atlanta Federal Reserve President Bostic remarked that, while considerable uncertainty remains regarding the ramifications of U.S. trade and immigration policies, he anticipates that the Fed could feasibly lower interest rates by a total of 50 basis points this year. Bostic forecasted two cuts of 25 basis points but acknowledged the substantial uncertainty surrounding this prediction, which could influence the economy from multiple directions. He noted that while he does not foresee an imminent spike in inflation, there are widespread concerns in the business sector about how new tariffs and regulatory changes might impact future economic prospects.
Moreover, Federal Reserve member Musalem alluded to rising inflation expectations and potential stagflation risks, indicating the challenging decisions that lie ahead for the Fed. He expressed concern that despite some colleagues believing inflation expectations are anchored, recent data suggests an upward trend, which could push the Fed toward a more restrictive monetary stance. Musalem did not provide his current projections for rate cuts this year, but his caution indicated that the Fed's reasoning for anticipating falling inflation and future rate reductions might become increasingly complicated due to rising import tariffs and amended immigration rules that could affect price levels.
In tandem with wider economic themes, U.S. media reported a significant milestone for OpenAI, noting that the company’s weekly active user count reached 400 million. This represents a substantial growth of 33% from the previous December figure of 300 million. The COO of OpenAI, Brad Lightcap, attributed the increase to greater utility and familiarity of ChatGPT among a broader audience, emphasizing that people genuinely desire these tools and recognize their inherent value. This growth extends within their burgeoning enterprise sector, with OpenAI now hosting 2 million paid business users, witnessing a doubling in numbers since September. Developer traffic has similarly surged, with the usage of the "reasoning" model GPT-3 experiencing a five-fold increase over the past six months.
Finally, in individual stock news, the recent rally in Meta Platforms has led to calls for a potential stock split, given their unprecedented 20-day rising streak, which pushed the stock price to a new all-time closing high, and year-to-date gains exceeding 20%. Following the trend of companies like NVIDIA and Broadcom, which have executed stock splits amid surging prices driven by the AI boom, there are expectations that this may indicate confidence from Meta in its stock performance. According to analysts from Bank of America, last year saw the highest number of stock splits within the S&P 500 since 2013, further amplifying discussions surrounding Meta being the sole tech giant yet to split its stock since its 2013 IPO. Stock splits are often viewed as a method to boost market sentiment, reflecting an average price return of up to 25% a year after the split, significantly outpacing the broader market returns.