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Stock market today: Stocks slide after Fedspeak as oil surges, March jobs report on deck

Ines Ferré, Karen Friar and Josh Schafer
Updated

Stocks slumped on Thursday as oil hit its highest price in six months and a key Federal Reserve official floated a warning that interest rate cuts might not come in 2024.

The Dow Jones Industrial Average (^DJI) fell almost 1.4%, or 550 points while the S&P 500 (^GSPC) dropped 1.2%. The tech-heavy Nasdaq Composite (^IXIC) slipped 1.4%. This marked the S&P 500's worst single-day drop since Feb. 13.

All three major averages reversed strong midday gains after Minnesota Fed President Neel Kashkari suggested the Fed may not cut interest rates at all this year if inflation progress stalls. The positive market action also paused amid a spike in oil prices.

Oil futures spiked more than 1% amid escalating tensions in the Middle East. West Texas Intermediate (CL=F) settled at $86.59 per barrel while Brent (BZ=F), the international benchmark price, closed at $90.65 per barrel, their highest level since October.

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Prior to Kashkari's comments, the market had shaken off a rough start to the second quarter after Chair Jerome Powell soothed concerns the Federal Reserve would lose its nerve for making rate cuts.

All eyes are now set to turn to the March jobs report, due out Friday morning, will be a key economic input for the Fed's data-dependent policy decision-making. By and large, experts don't expect to see any sign of cracks in the strong US labor market story. Department of Labor data released on Thursday showed initial jobless claims rose by 9,000 to 221,000 last week, their highest level since January.

LIVE COVERAGE IS OVER12 updates
  • Josh Schafer

    Oil spike contributes to down day for markets

    Oil futures spiked more than 1% amid escalating tensions in the Middle East. West Texas Intermediate (CL=F) settled at $86.59 per barrel while Brent (BZ=F), the international benchmark price, closed at $90.65 per barrel, their highest level since October.

    The jump in oil, combined with commentary about potentially not cutting interest rates this year from Minnesota Fed president Neel Kashkari, appeared to spook investors on Thursday. The chart below shows a clear alignment between oil's rise on the day and tech stocks fall.

  • Dani Romero

    Homeowners holding back amid mortgage rates below 7%

    High mortgage rates continue to be an obstacle in the housing market's recovery.

    Data from John Burns Research and Consulting shows that as of March 33% of homeowners with a household income of $50,000 are waiting for mortgage rates to decline, making it the number one factor holding current homeowners back from purchasing a new home.

    The current 30-year fixed mortgage rate remains hovering around 6.8% this week, according to Freddie Mac. Rates have shown little movement, and there’s expectations that rates will not decrease meaningfully in the near-term.

    Many homeowners financed their home at a lower rate. According to Redfin, about 89% of homeowners nationwide were sitting on cheap mortgages below 6% as of January.

    For this reason, there has been no incentive to move as those homeowners would need to finance a new home at a higher rate than the one they are currently holding, adding hundreds of dollars to their mortgage payment.

    The median monthly payment for the four weeks ending March 31 landed at $2,700 at a 6.79% mortgage rate, $13 shy of the record high hit in October 2023 when mortgage rates were hovering 7%.

    Home prices have been no help either because of the inventory crunch. The median price of previously owned homes rose 5.7% in February from a year earlier to $384,500 — the eighth consecutive month of year-over-year price gains.

    As a result, buyers and sellers remain on the sidelines.

  • Josh Schafer

    A surging stock market could boost consumer spending by $700 billion

    Stocks have soared to start 2024 and that could mean further upside for the US economy too.

    Given Americans' increasing participation in the US equity market, the surge in stocks has boosted household wealth. In a new research note on Thursday, Capital Economics argued that the increases could be a tailwind to further consumer spending.

    "The sheer scale of the rise in wealth that we are forecasting means the boost could still be significant, especially when the share of US families that own stocks has risen to a record high," Capital Economics deputy chief US economist Andrew Hunter wrote.

    A chart from Capital Economics shows total household assets have closely tracked performance in the S&P 500 over the last decade, meaning if the stock market rally continues increased household wealth will likely follow.
    A chart from Capital Economics shows total household assets have closely tracked performance in the S&P 500 over the last decade, meaning if the stock market rally continues increased household wealth will likely follow. (Capital Economics)

    Capital Economics estimates the current rally has already provided a $200 billion boost to potential consumption and that could balloon to another $700 billion in the next two years if the equity strategy team's call for 6,500 on the S&P 500 by the end of 2025 lands. This, Hunter added, would present "an upside risk" to economic forecasts.

    It just might not come all at once.

    "We suspect rising household wealth is likely to underpin a gradual acceleration in consumption growth in 2025-26 rather than driving a sudden boom," Hunter wrote. "And if we’re right that the AI stock market bubble will eventually burst — conceivably in 2026 — much of this ‘paper’ wealth might never be spent at all."

  • Josh Schafer

    Stocks turn lower as Fed policy comes into focus

    All three of the major averages reversed in afternoon trade, as concerns over when the Federal Reserve will cut interest rates appeared to take center focus again.

    The indexes hit their session lows after Minnesota Fed president Neel Kashkari suggested the Fed may not cut interest rates at all this year if inflation progress stalls.

  • Alexandra Canal

    Disney CEO Bob Iger: Succession is board's 'No. 1 priority'

    After successfully fending off activist investor Nelson Peltz, Disney (DIS) CEO Bob Iger says the company's board is focused on the future — in particular, who will be the entertainment giant's next CEO.

    In an interview with CNBC on Thursday, Iger said succession planning remains the most important focus area for Disney, categorizing it as the board's "No. 1 priority.

    He noted the company's succession committee — led by board members Mark Parker and James Gorman — met seven times in 2023 and intends to meet even more this year. Bob Iger's contract is set to expire at the end of 2026.

    "[The board is] confident they will choose the right person at the right time," Iger added. "They're treating it with a sense of urgency because it is so important."

    Succession became a key sticking point for Peltz and his backers throughout a months-long proxy battle that officially ended at the company's annual shareholder meeting on Wednesday.

    At the meeting, Disney revealed the current board will remain intact following a shareholder vote that gave the company's slate a win "by a substantial margin." Peltz had attempted to secure board seats for himself and former Disney CFO Jay Rasulo.

    "This whole process gave the board and some members of management an opportunity to engage with many shareholders, perhaps on an even deeper level," Iger said. "What we heard was, surprisingly, consistent with exactly what our priorities are ... Clearly, shareholders are interested and care very much about succession."

    Disney's succession problems began in 2020 after Iger hand-selected Bob Chapek, who at the time was head of the company's parks, experiences, and products segment, for the job.

    Shortly after, the COVID-19 pandemic upended the business. Under Chapek's tenure, Disney also faced political battles, A-list talent problems, and controversial reorganizations. Meanwhile, Chapek was left to contend with the ever-looming shadow of Iger, who spoke out against some of Chapek's decisions even prior to his return. Chapek was ousted from the position in November 2022 after less than three years on the job.

    Read more here.

  • Josh Schafer

    HubSpot shares rise on report Alphabet could buy company

    Shares of HubSpot (HUB), an online marketing software company, shot up more than 8% after a report from Reuters said Alphabet is mulling a $35 billion offer for HubSpot.

    Reuters reports the acquisition would be Alphabet's largest ever. Shares of Alphabet were little changed after the report, maintaining their gains of about 2.5%

  • Josh Schafer

    Trending tickers on Thursday

    Amazon (AMZN) stock led the Yahoo Finance trending tickers page as shares of the tech giant hit a 52-week high, rising more than 1% on the day. The move came one day after the company announced layoffs for several hundred employees in its cloud-computing business.

    Paramount Global (PARA) shares sank nearly 10%, after rallying double digits the day prior, amid reports the media company could be bought by Skydance Media.

    Levi Strauss (LEVI) gained more than 16% following the company's latest earnings report on Wednesday night. The company's revenue of $1.56 billion came in higher than Wall Street's estimates for $1.55 billion.

  • Josh Schafer

    Weekly jobless claims pick up but still consistent with a 'healthy' job market

    A busy week of labor market data rolled on Thursday morning with the latest reading on weekly jobless claims.

    Initial claims for state unemployment benefits rose to a seasonally adjusted 221,000 for the week ended March 30, according to new data from the Labor Department, slightly above the 210,000-212,000 range seen for most of March.

    Still, the number remains low, per economists, and reflects continued underlying strength in the labor market.

    "Initial jobless claims rose to the highest level since late January in the week ended March 30, but remain comfortably below a level that would signal a significant weakening in labor market conditions," Oxford Economics lead US economist Nancy Vanden Houten wrote in note on Thursday.

    She added: "The claims data and other labor market indicators are consistent with a job market that is still quite healthy."

  • Ines Ferré

    Ford stock pops on delay of all-electric SUV, expands hybrid offerings

    Ford (F) shares jumped almost 2% after the automaker said it is "retiming" the launch of upcoming electric SUV to 2027 as it allows the EV market to mature.

    The company also stated it's expanding its hybrid electric vehicle offerings. Ford said it plans to offer hybrid across its entire lineup by the end of the decade.

    Legacy automakers have been scaling back their EV rollouts recently amid signs of an EV growth slowdown. Meanwhile an uptick in hybrid sales has prompted manufacturers to expand offerings of those types of vehicles.

  • Ines Ferré

    Meta hits new high, helps lead Nasdaq higher

    Meta (META) shares gained more than 2% to hit a new high of $523.85 during Thursday's session.

    The stock is up 47% year to date as the second-best performer out of the Magnificent Seven," behind Nvidia (NVDA).

    Shares of the social media giant were helping lift the Nasdaq Composite (^IXIC) on Thursday, the biggest gainer out of the major averages.

     

  • Ines Ferré

    Tech stocks lead markets higher

    Stocks opened higher on Thursday with tech stocks leading the gains after a rough start to the second quarter.

    The Dow Jones Industrial Average (^DJI) rose about 0.7%, coming off three losing days in a row for the blue-chip index.

    The S&P 500 (^GSPC) gained 0.7%, while the tech-heavy Nasdaq Composite (^IXIC) popped about 0.9%, after both gauges made slight gains in the previous session.

    The S&P 500 Technology Sector ETF (XLK) gained roughly 1% at the open. Equities related to Real Estate (XLRE) and Consumer Discretionary (XLY) also rose.

    On Wednesday Fed Chair Jerome Powell said central bank officials expect to lower interest rates at "some point" this year.

  • Brian Sozzi

    Citi making some good points on General Motors

    One of the most under-the-radar stock moves of 2024 has been General Motors (GM).

    Shares are up 25% year to date, outperforming Ford's (F) 12% advance and the 9% gain for the S&P 500. The move, in this writer's humble view, has been fueled by better execution at GM around the EV transition and a new desire to return cash to shareholders.

    Wall Street may be finally getting into gear on the stock after years of disbelief.

    "With Q1 wrapping up, it's become clearer that GM is likely to post another resilient quarter. While industry headwinds and execution risks persist, the now five plus year running pushback that GM’s latest strong quarter/year will be its last is increasingly looking stale," said Citi analyst Itay Michaeli in a client note this morning.

    Michaeli adds the "comeback" for GM is well underway, and he sees the stock as one of his top picks.

    I came away impressed after spending the day touring an EV facility in Detroit with GM chair and CEO Mary Barra (video below).

    The company is working on a lot of hard stuff that takes precision execution to profitably pull off. Considering that organized chaos, it's a positive that GM is still a nicely profitable automaker and is out there buying back stock with its excess cash.

    It may be time to get GM's stock out of the single-digit PE multiple range it has been stuck in for eons.