Stock Market News for May 26, 2023

·3-min read

U.S. stock markets closed mixed on Thursday as market participants remained watchful on debt ceiling negotiations. On the other hand, robust earnings results of a semiconductor behemoth significantly boosted the entire technology space. The Nasdaq Composite and the S&P 500 rallied while the Dow ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 0.1% to close at 32,764.65. Notably, 17 components of the 30-stock index ended in negative territory, while 13 in positive zone. The blue-chip index closed below its 200-day moving average.

The tech-heavy Nasdaq Composite finished at 12,698.09, climbing 1.7% or 213.93 points due to strong performance of large-cap technology stocks. The S&P 500 advanced 0.9% to end at 4,151.28.

Eight out of 11 broad sectors of the benchmark index closed in negative territory while three ended in positive zone. The Technology Select Sector SPDR (XLK) surged 3.8% while the Energy Select Sector SPDR (XLE) and the Utilities Select Sector SPDR (XLU) fell 1.8% and 1.3%, respectively.

The fear-gauge CBOE Volatility Index (VIX) was down 4.4% to 19.14. A total of 10.8 billion shares were traded on Thursday, higher than the last 20-session average of 10.5 billion. The S&P 500 recorded 11 new highs and 31 new lows; while the Nasdaq registered 56 new highs and 163 new lows.

Debt Ceiling Negotiation

The debt-ceiling crisis continued to weigh down on the market as continued negotiations between the Republicans and the Democrats bore no fruit. Even as House Speaker McCarthy insisted that he was in regular touch with President Biden over the phone, it was apparent that staff-level negotiations were not delivering any breakthrough.

The market has increasingly grown weary about the two major parties not reaching a consensus on the debt-ceiling issue. Investors have started to price in an eventual economic downturn resulting from the country defaulting on its debt obligations.

NVIDIA Reports Strong Results

NVIDIA Corp. NVDA reported first quarter fiscal 2024 non-GAAP earnings of $1.09 per share, which beat the Zacks Consensus Estimate by 18.5%. Although, the reported figure plunged 20% year over year, it jumped 24% sequentially. The quarter-on-quarter increase in earnings was mainly due to higher revenues, improved gross margin and lower operating expenses.

First-quarter revenues tanked 13% year over year while climbing 19% sequentially to $7.19 billion. The top line easily beat the consensus mark of $6.52 billion. For the second quarter of fiscal 2024, NVIDIA anticipates revenues of $11 billion (+/-2%), way higher than the Zacks Consensus Estimate of $7.10 billion. The GAAP and non-GAAP gross margins are projected at 68.6% and 70%, respectively (+/-50 bps).

Consequently, shares of NVIDIA soared 24.4%. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

The Department of Labor reported that weekly jobless claims increased 4,000 to 229,000 for the week ended May 20, lower than the consensus estimate of 245,000. Previous week’s data was revised downward to 225,000 from 242,000 reported earlier. Continuing Claims (those who already received government benefit) for the week ended May 13, came in at 1.794 million — a decrease of 5,000 from downward revision of 1.813 million in the previous week.

The U.S. economy grew 1.3% in first-quarter 2023 compared with 1.1% reported earlier. The consensus estimate was 1.1%.

The National Association of REALTORS reported that pending home sales recorded no change in April from March. The consensus estimate was an increase of 0.8%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research