The U.S. stock market saw a notable shift in momentum, marking the end of a five-week streak of positive performance. Investors grew increasingly cautious amid concerns about a potential slowdown in economic growth, overshadowing the previous optimism that had buoyed markets. This shift in sentiment was largely driven by a combination of economic data releases and corporate developments.
One significant factor contributing to the market’s apprehension was the downward revision of the first-quarter GDP growth rate. The U.S. economy expanded at an annualized rate of 1.3%, falling short of the previous estimate of 1.6%. This weaker-than-expected growth raised concerns about the underlying strength of the economic recovery and its implications for corporate earnings.
While there were some positive signs on the inflation front, with the Federal Reserve’s preferred inflation measure holding steady in April, other indicators painted a less favorable picture. Slowing spending and income growth suggested weakening consumer health, a crucial driver of economic activity. Moreover, the steep decline in the Chicago business activity gauge to its lowest level since May 2020 added to concerns about a potential downturn in the business cycle.
Against this backdrop, investors turned their attention to defensive sectors like utilities, seeking refuge from market volatility. The tech sector, on the other hand, bore the brunt of investor anxiety, experiencing significant declines during the week. One notable event that contributed to this downturn was the guilty verdict against former President Donald Trump on 34 charges related to falsified business records. This development weighed on Trump Media & Technology Group’s stock, reflecting concerns about the company’s financial performance and declining user engagement on its platform, Truth Social.
In contrast, Nvidia emerged as a standout performer, witnessing a remarkable surge in market capitalization. The company’s stock reached new all-time highs, driven by growing investor confidence fueled by Nvidia’s advancements in AI technology. Additionally, the potential involvement of Nvidia’s products in Elon Musk’s supercomputing projects further bolstered investor optimism.
Meanwhile, in the housing market, U.S. home prices soared to record levels in March 2024, posting a 7.4% year-on-year increase, the fastest growth rate in over a year. Leading this surge were cities like San Diego, New York, and Cleveland, underscoring the robust demand for housing amid favorable market conditions.
Despite Nvidia’s stellar performance, several other U.S. stocks outperformed it over the past year. Companies like Vera Therapeutics and MoneyLion capitalized on growth opportunities in sectors such as biotech, fintech, and retail, showcasing diversified avenues for investment returns.
Overall, the week in the U.S. stock market was marked by a nuanced interplay of economic data, corporate developments, and investor sentiment. While concerns about economic growth lingered, investors remained vigilant, navigating market dynamics and positioning themselves accordingly in anticipation of future opportunities and challenges.