Stock Market Today: Stocks Reverse Lower as Treasury Yields Spike
A good-news-is-bad-news retail sales report lowered rate-cut expectations and caused government bond yields to surge.
Stocks opened higher Monday as bargain hunters swooped in and market participants cheered a solid retail sales report. The buying power ran out of steam around lunchtime, though, with the main benchmarks closing in negative territory.
The Nasdaq Composite logged a third straight weekly loss last Friday, while the S&P 500 and the Dow Jones Industrial Average each finished lower for a second consecutive week.
This likely had several investors buying the dip to start the new week, while some seemingly encouraging economic data also boosted sentiment early on. Specifically, the Census Bureau said retail sales rose 0.7% in March vs the prior month, outpacing economists' expectations for a 0.3% increase. Core retail sales, which exclude automobiles, also came in above forecasts.
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"Strong employment growth has continued to propel consumer demand during the first quarter of the year with retail and food services sales surprising to the upside once again," says Eugenio Alemán, chief economist at Raymond James. "The strength in consumer demand also gives credence to the strong inflation reading during the first quarter of the year, which is not good news for the Federal Reserve and for interest rates going forward."
Indeed, futures traders are now pricing in 41% chance the first quarter-point rate cut will come in July – down from 50% one week ago – according to CME Group's FedWatch Tool.
As a result, Treasury yields spiked and stocks reversed course. At the close, the Nasdaq was down 1.8% at 15,885 and the S&P 500 was 1.2% lower at 5,061.
Informatica buyout buzz sinks Salesforce
The Dow, meanwhile, closed down 0.7% at 37,735 as Salesforce (CRM) plunged 7.3%. This easily made the software-as-a-service (SaaS) firm today's worst-performing Dow Jones stock. Sparking the selloff was news that Salesforce is in late-stage talks to buy Informatica (INFA, -6.5%), an artificial intelligence-powered data management platform.
While no specific dollar amount for the deal has been reported, The Wall Street Journal suggests it is below the $38.48 per-share price INFA closed at on Friday, April 13. It also notes that the buyout would be the biggest for Salesforce since its nearly $28 billion acquisition of Slack in 2021.
However, the Dow's losses were contained thanks to Goldman Sachs (GS), which climbed 2.9% on a better-than-expected first-quarter earnings report.
Tesla drops on layoff news
Tesla (TSLA) was another big mover today, sinking 5.6% on news the electric vehicle maker will cut roughly 10% of its global workforce. Additionally, two top executives – Rohan Patel and Drew Baglino – announced they were leaving the company.
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