Dow Jones falls 605 points as new economic data clouds prospects for rate cuts

• The Dow Jones fell more than 600 points on Thursday, marking the worst day of 2024.

• Nvidia’s solid earnings numbers and guidance boosted the stock, but the broader market saw a sharp dip.

• Bets on rate cuts faded after data on the services and manufacturing sectors pointed to persistent inflation.

U.S. stocks closed sharply lower on Thursday, trailing Nvidia’s earnings and traders dealing with fresh fears of persistent inflation and high interest rates.

Nvidia Shares soared Thursday, a day after reporting earnings results that easily beat estimates and provided solid guidance for the current quarter. The stock rose as much as 12% to close 9.3% higher at $1,037.99 per share.

That was the extent of Thursday’s bullishness, with the Dow Jones Industrial Average falling 605 points while the S&P 500 and the Nasdaq Composite retreated from recent record highs. The decline came after new PMI data for the services and manufacturing sectors exceeded economists’ expectations, indicating more inflationary pressure for the U.S. economy.

In addition, claims for unemployment benefits were lower than expected, underscoring the continued strength of the labor market. Last week they came to 222,000, while estimates were 220,000.

Thursday’s figures put pressure on the prospects for rate cuts later this year. According to the CME FedWatch toolThe market odds for a September rate cut have fallen below 50%, and rate cuts in June and July are effectively off the table.

The yield on ten-year government bonds rose by four basis points to 4.475%.

Here’s where the US indexes stood at 4pm on Wednesday:

Here’s what else happened today:

In commodities, bonds and crypto:

• West Texas average crude fell 1% to $76.82 a barrel. Brent crude oilthe international benchmark, fell 0.75% to $81.30 per barrel.

• Gold fell 2.43% to $2,334.80 an ounce.

• The yield on ten-year government bonds rose by five basis points to 4.482%.

• Bitcoin fell 2.63% to $67,306.

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