Closing Market Update

Stocks recover pre-holiday, end the week mixed

May 24, 2024 Joe Mazzola
Mega cap tech stocks led Friday's market, helping the Nasdaq notch a fifth weekly gain.

Published as of: May 24, 2024, 4:40 p.m. ET 

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(Friday market close) Major U.S. equity benchmarks rallied ahead of the holiday weekend and finished mixed for the week. While the Dow Jones Industrial Average® ($DJI) lost ground and the S&P 500® index (SPX) finished flat since last Friday, earnings results from Nvidia (NVDA) midweek helped the Nasdaq Composite® ($COMP) notch a fifth weekly advance.

Economic data was in focus early Friday. The Commerce Department reported new orders for durable goods surged to a much better-than-expected 0.7% in April from March. Economists had expected a 0.8% decline, according to Excluding transportation, new orders rose 0.4% in April, which was also above expectations. 

Separately, the final May University of Michigan Consumer Sentiment Index rose to 69.1 from a previous reading of 67.4 and above the consensus estimate of 67.6, according to Meanwhile, the report’s one-year Inflations Expectations data was revised down to 3.3% from 3.5%. 

Stocks marched broadly higher in morning trading after Friday’s stronger-than-expected economic data, then trading activity seemed to slow in afternoon action ahead of the long weekend.

Here's where the major benchmarks ended:

  • The S&P 500 index added 36.9 points (0.7%) to 5,304.72, basically flat on the week; the Dow Jones Industrial Average gained 4.3 points (0.0%) to 39,069.59, down 2.3% for the week; the Nasdaq Composite® ($COMP) rallied 184.8 points (1.1%) to 16,920.79, up 1.4% for the week.
  • The 10-year Treasury note yield (TNX) was little changed at 4.46%, up about four basis points for the week.
  • The Cboe Volatility Index® (VIX) fell 0.86 to 11.91 and finished a roller-coaster week roughly where it started.

Some of the mega cap names saw notable strength Friday. Nvidia added another 2.6% to Thursday's 9.3% post-earnings rally. Apple (AAPL) gained 1.7%, Meta Platforms (META) added 2.7%, and Tesla (TSLA) rose 3.2%

The small cap Russell 2000® Index (RUT) also outperformed, gaining nearly 1% Friday. However, for the week, the index lost 1.3%.

Read all our market commentary on our Insights & Education page, and you can follow us at @SchwabResearch.

Read all our market commentary on our Insights & Education page, and you can follow us at @SchwabResearch.

Stocks on the move

The following companies had stock price moves driven by analyst ratings, quarterly earnings, or other news:

  • Ross Stores (ROST) rallied almost 8% after the discount clothing retailer raised its full-year profit outlook. 
  • Workday (WDAY) sank more 15% after the software company lowered its subscription revenue forecast.
  • First Solar (FSLR) rose another 11% and is up 41% over the past four days after Barron's highlighted the company as a possible artificial intelligence play earlier in the week.
  • Intuit (INTU) slumped 8.4% after the tax software company issued cautious guidance for the current quarter.
  • Deckers Outdoor (DECK) rallied 14.2% on strong quarterly sales growth numbers.

While first quarter earnings season is almost complete, a few notable companies are expected to report after the holiday. Dow member Salesforce (CRM) is scheduled to report results Wednesday. Best Buy (BBY), Costco Wholesale (COST), and Dollar General (DG) are among several retailers due to report Thursday.

Higher-for-longer narrative

U.S. markets are closed Monday for Memorial Day and, as corporate America closes the books on the first-quarter earnings reporting season, the economic calendar will likely be scrutinized closely heading into the June 11–12 Federal Open Market Committee (FOMC) meeting.

Minutes from the Federal Reserve's April 30–May 1 meeting released midday Wednesday seemed to reinforce the higher-rates-for-longer narrative because of the central bankers' general uncertainty over persistent inflation. Some Fed members noted the "willingness to tighten policy further" if inflation risks materialize. At the same time, while some policymakers thought rates were restrictive, others were uncertain about the degree of restrictiveness. The mixed messaging caused some consternation following the release of the minutes; stocks and bonds faced modest selling pressure Wednesday afternoon.

Thursday's stronger-than-expected manufacturing data further sparked a jump in Treasury yields as bond traders scaled back expectations for Fed rate cuts this year. Specifically, the S&P Global US Manufacturing PMI™ bounced 0.9 to 50.9 in the preliminary May report. But it was likely the services PMI surging 3.5 points to 54.8 that caused the most concern, as services inflation remains the most "sticky" and difficult to conquer at this point. The services PMI was the highest reading since 54.9 reported last May, the strongest reading since April 2022.

The Fed minutes and hotter-than-expected PMI data sent bond yields higher for the week and pushed back the probability of a September rate cut from 66% to 50%, according to the CME FedWatch Tool.

Data next week include the government's second gross domestic product (GDP) estimate Thursday. Personal spending, personal income, and the Fed's favored inflation metric, the Personal Consumption Expenditures (PCE) prices are due Friday.