Stock Market News Today: Markets end lower on Salesforce drag, GDP data (SP500)

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U.S. stocks ended lower on Thursday, with a post-earnings plunge in enterprise software giant Salesforce (CRM) weighing on Wall Street’s blue-chip gauge. Market participants also received data that sent conflicting signals about the economy and monetary policy.

In an unusual event, issues with data feeds briefly halted index pricing in the Dow Jones Industrial Average (DJI) and the S&P 500 (SP500) about an hour into the start of regular trading. They resumed ticking soon after.

The Dow (DJI) shed 0.86% to close at 38,111.48 points, as Salesforce (CRM) posted its worst intraday performance in nearly two decades. The cloud software vendor concerned investors and analysts after delivering quarterly results and guidance that missed expectations.

The tech-heavy Nasdaq Composite (COMP:IND) slipped 1.08% to settle at 16,737.08 points, while the benchmark S&P 500 (SP500) retreated 0.60% to conclude at 5,235.48 points.

Of the 11 S&P sectors, nine ended in the green.

Offsetting some of Salesforce’s (CRM) impact was a jump in shares of HP (HPQ). The company’s personal computer business returned to sales growth following seven straight quarters of declines.

Retailers also grabbed some of the spotlight. Dollar General (DG) reversed pre-market gains to close lower, despite the discount retailer topping quarterly same-store sales growth estimates. Kohl’s (KSS) cratered after the department store chain slumped to a surprise quarterly loss and slashed its annual net sales guidance.

Best Buy (BBY) bucked the trend, with the stock ending among the top percentage gainers on the S&P 500 (SP500), after the consumer electronics retailer managed to improve quarterly profitability despite a fall in domestic comparable sales.

Earlier, before the opening bell, all eyes were on economic data from the U.S. Bureau of Economic Analysis. According to the agency’s second estimate of Q1 real gross domestic product (GDP) growth, the economy expanded at an annual rate of 1.3%, a lower figure than the first estimate of +1.6%. The revision was primarily due to a fall in consumer spending estimates.

The report also showed that the core personal consumption expenditures (PCE) price index – the Federal Reserve’s preferred inflation gauge – was revised lower by 0.1 percentage points to +3.6% for Q1 2024.

The data came as a bit of a mixed bag to traders following monetary policy. On the one hand, a larger-than-expected slowdown in the economy takes some pressure off the Fed and allows it some room to cut interest rates. On the other hand, it creates concerns about stagflation.

The focus now turns to Friday’s personal income and outlays report, which will contain a monthly reading on the core PCE price index.

“The market is figuring out that reasons that could force the Fed to cut rates – like poor economic growth conditions – may be a double-edged sword, as these factors could hurt corporate profits and margins as well. In the current market of both inflation and interest rate headwinds, profits, and margins have been the main drivers of stock price strength. Today, Bloomberg reported a new multi-decade high in S&P 500 margins,” Leo Nelissen, part of investing group iREIT on Alpha, told Seeking Alpha.

“However, as long as lower inflation is the main driver of investor euphoria, the market has room to rally. That’s why tomorrow’s PCE numbers are so important!” Nelissen added.

U.S. Treasury yields slipped after the GDP data, as the revision in economic growth sparked hopes for rate cuts and halted a bond sell-off. The longer-end 30-year (US30Y) and 10-year yields (US10Y) were both down 6 basis points each to 4.68% and 4.55%, respectively. The shorter-end more rate-sensitive 2-year yield (US2Y) was down 5 basis points to 4.94%.

See how Treasury yields have done across the curve at the Seeking Alpha bond page.