A drop in shares of retailers brought a halt to the remarkable rally that had propelled stocks to record highs, resulting in a mixed performance at the end of the week.
The Dow Jones Industrial Average experienced a decline of 0.8%, equivalent to a loss of 305 points, marking a deviation from its recent upward trajectory. Meanwhile, the S&P 500 also retreated, albeit more modestly, shedding 0.1% of its value. In contrast, the Nasdaq Composite managed to eke out a marginal gain of 0.2%, reaching yet another record high.
The decline in stock prices was largely attributed to the underperformance of certain retail giants. Nike, for instance, saw its shares plummet by 6.9% following a disappointing quarterly sales report and a downward revision of its revenue outlook for the year. Similarly, Lululemon witnessed a significant drop of over 15% after its CEO expressed concerns about consumer demand and acknowledged a slower-than-anticipated start to the year.
These developments sparked apprehension among investors regarding the strength of U.S. consumer spending, which has been a driving force behind the nation’s economic growth over the past year. Such concerns prompted some investors to reassess their expectations and abandon their previous projections of an imminent recession.
The downturn in the retail sector wasn’t limited to Nike and Lululemon, as other companies like Bath & Body Works and Estée Lauder also experienced declines in their stock prices, dropping by approximately 3.1% and 2.1%, respectively.
Despite the setback in the retail sector, recent market activity has been characterized by a surge in optimism fueled by expectations of a shift away from high borrowing costs. Federal Reserve Chair Jerome Powell’s remarks on Wednesday, indicating the central bank’s intention to gradually reduce interest rates three times this year, contributed to this sentiment. As a result, all three major stock indexes reached new record highs on consecutive days, reflecting the prevailing optimism among investors.
The approval of the merger deal between Digital World Acquisition Corp. and Truth Social represents a significant milestone for Donald Trump, bringing him closer to potentially reaping a windfall of approximately $3 billion. As a result of this approval, Truth Social is poised to commence trading on the stock market in the upcoming week. Notably, the stock’s ticker symbol is expected to transition to DJT, reflecting Donald Trump’s initials and marking a symbolic moment in the journey of his social media venture towards public market debut.