(May 21): US stocks retreated as oil and treasury yields resumed their climb, with traders awaiting concrete signals on progress towards a Middle East peace deal and retail giant Walmart Inc warning about the pinch of higher fuel prices. Nvidia Corp’s earnings did little to reignite momentum in the artificial intelligence (AI) trade.
The S&P 500 and the Nasdaq 100 declined by 0.3% at 9.56am. The Dow Jones Industrial Average was little changed.
Investor sentiment was also tempered after JPMorgan Chase & Co chief executive officer Jamie Dimon warned that interest rates could rise “much further” from current levels.
Nvidia shares edged lower even after the chipmaker delivered quarterly results and a forecast that largely met lofty expectations. While analysts remained broadly constructive on the outlook for AI spending, some questioned the durability of the company’s breakneck growth amid intensifying competition and elevated investor skepticism around the sector’s valuations.
“Nvidia’s numbers gave Asian markets a lift, but that tailwind faded fast as the Straight of Hormuz remains unresolved and with the 30-year treasury firmly above 5%, investors are finding it hard to chase a rally that’s already had such a massive run,” said Dave Mazza, chief executive officer of Roundhill Financial.
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The pullback comes after the S&P 500 gained 17% from a late March bottom. In the six weeks through May 15, the surge in a small group of technology giants stretched outperformance by the market-cap-weighted S&P 500 over its equal-weighted counterpart to the widest in at least 35 years, according to UBS Global Wealth Management.
“We continue to think this bull market — and the AI trade — has more to go, even though it could take a breather now that earnings season is over and attention may shift back to the still unresolved situation in the Middle East,” the firm’s strategists wrote.
Walmart Inc powered through another quarter of solid sales growth, flexing its scale to draw value-seeking shoppers and defy growing angst about economic instability. Still, shares fell as guidance for second-quarter adjusted earnings per share disappointed, and the retailer warned that fuel costs are squeezing the company’s bottom line.
See also: Stocks, bonds climb as oil falls on US-Iran hopes
Among other movers, Deere & Co shares slumped as farm machinery sales stayed sluggish in North America, raising questions on when the agriculture economy will start getting better.
Applied Digital shares rose after the company signed a 15-year lease valued at about US$7.5 billion with a US investment-grade hyperscaler for its Polaris Forge 3 campus. Elf Beauty Inc shares gained after the cosmetics company beat average analyst estimates on profit and revenue.
Elsewhere, IBM Corp, GlobalFoundries Inc and smaller quantum-computing companies rallied after The Wall Street Journal reported that the Trump administration plans to award US$2 billion in grants to nine firms in deals that include government equity stakes.
In the IPO space, SpaceX publicly filed for what could become the largest initial public offering (IPO) on record, disclosing widening losses alongside a super-voting share structure designed to preserve Elon Musk’s control. The rocket and satellite company posted a first-quarter net loss of US$4.28 billion on revenue of US$4.69 billion, compared with a loss of US$528 million on revenue of roughly US$4 billion a year earlier, according to the filing.
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