S&P 500 and Nasdaq Extend Losing Streak to Fifth Session

The S&P 500 and Nasdaq indexes recorded their fifth consecutive session of losses on Thursday, marking the longest losing streak for the S&P 500 since late October and the Nasdaq's longest negative run since January. The Dow Jones Industrial Average eked out a small gain of 0.06% to finish at 37,775.38, but the S&P 500 slipped 0.22% to 5,011.12 and the Nasdaq Composite dropped 0.52% to 15,601.50.

The recent market pullback has been driven in part by growing concerns around the path of inflation and monetary policy from the Federal Reserve. Economic data showed the labor market remained resilient, with weekly initial unemployment claims unchanged from the prior week. However, comments from Fed officials indicated the central bank was unlikely to cut interest rates in the near future, leading markets to temper expectations of a rate cut in June.

Why this matters: The extended losing streak for the S&P 500 and Nasdaq highlights the ongoing uncertainty and volatility in the stock market as investors grapple with the outlook for interest rates and inflation. The Fed's stance on maintaining higher rates for longer is weighing on sentiment and contributing to the recent pullback in equities.

Notable movers on Thursday included Meta Platforms, which gained 1.5% after launching its Llama 3 AI assistant, and Tesla, which fell 3.6% after a Deutsche Bank analyst downgraded the stock and cut the price target. Semiconductor stocks also declined, with Taiwan Semiconductor Manufacturing Company (TSMC) dropping 4.9% after providing a weaker-than-expected outlook for the global chip market.

Despite the recent stock selloff, some oversold signals have emerged, and market leadership is seen as an important factor going forward. Investors are closely watching corporate earnings reports, with Netflix's financial update seen as a key test for the earnings season. "Stocks have been struggling recently as yields in the bond market have been rising, putting pressure on investors who have largely given up on hopes that the Federal Reserve will deliver many interest rate cuts this year," the Financial Times reported.

Key Takeaways

• S&P 500 and Nasdaq indexes recorded 5th consecutive session of losses
• Concerns around inflation and Fed's monetary policy driving market pullback
• Fed unlikely to cut interest rates soon, tempering rate cut expectations
• Meta Platforms gained 1.5% after launching Llama 3 AI, Tesla fell 3.6%
• Semiconductor stocks declined, with TSMC dropping 4.9% on weak outlook