The Dow Jones Industrial Average fluctuated around the 50,000 mark on Thursday, with Wall Street's risk appetite tempered by a rise in oil prices and Treasury yields. The S&P 500 and Nasdaq Composite were both lower in morning trading, while the Dow moved between small gains and losses.
The shift lower followed a rebound on Wednesday, when the Dow had surged 645 points, or 1.3%, to close at 50,009.35, buoyed by a softer bond market and a drop in crude. That momentum faded as Brent crude climbed 2.2% to $107.32 a barrel, driven by renewed tensions between the U.S. and Iran after a report that Iran's Supreme Leader had ordered the country's near-weapons-grade uranium not to be sent abroad. The 10-year Treasury yield rose to 4.609%, making bonds more attractive and raising borrowing costs, which typically weighs on equities.
At 9:58 a.m. ET, the Dow was down 24 points, or 0.05%, at 49,987.34, while the S&P 500 fell 0.30% and the Nasdaq dropped 0.46%. By 10:30 a.m., the Dow had edged up 37 points, but the S&P 500 and Nasdaq remained in negative territory, highlighting the choppy session.
Walmart was a key drag on the Dow. The retail giant reported first-quarter net sales of $175.7 billion, up 7.1% from a year earlier, and operating income of $7.49 billion, up 5%. However, the company kept its annual sales and profit targets unchanged, disappointing investors. "An affirmed outlook for the full year simply was not enough," said Bryan Hayes, stock strategist at Zacks Investment Research. Walmart's CFO, John David Rainey, warned of "somewhat higher retail price inflation" if the cost environment remains elevated. The company's U.S. comparable sales rose 4.1%, and global e-commerce grew 26%. Rival Target lifted its annual sales forecast but also cautioned about a tough macroeconomic backdrop.
Nvidia, the AI chip giant, also failed to provide a lift. The company reported record first-quarter revenue of $81.6 billion, up 85% year-over-year, and forecast second-quarter revenue of $91 billion, plus or minus 2%. It also approved an additional $80 billion share repurchase plan. CEO Jensen Huang said the buildout of AI factories was "accelerating at extraordinary speed," but the stock slipped as investors looked past the strong numbers. Analysts noted that Nvidia faces increasing competition from Big Tech customers and chip rivals Intel and AMD, making the AI trade more crowded.
Economic data gave the Federal Reserve little reason to ease policy. Initial jobless claims fell by 3,000 to 209,000 in the week ended May 16, below the 210,000 expected. "The labor market is showing enough stability for the Fed to keep policy steady," said Matthew Martin, senior U.S. economist at Oxford Economics. Meanwhile, S&P Global's flash U.S. manufacturing PMI rose to 55.3 in May from 54.5, indicating expansion. However, Chris Williamson, chief business economist at S&P Global Market Intelligence, said the economy may struggle to deliver annualized second-quarter growth of much more than 1%.
The risk of oil, yields, and the Fed moving against stocks simultaneously remains. If disruptions in the Strait of Hormuz persist, energy and input costs could keep inflation elevated, pushing Treasury yields higher and forcing investors to price in a more hawkish central bank. That would be a challenging environment for richly valued AI shares and consumer stocks exposed to fuel and food costs.
U.S. equity markets were open as usual on Thursday. The next full stock-market holiday is Memorial Day on Monday, May 25, while bond markets are set for an early close at 2 p.m. ET on Friday ahead of the long weekend.
