Dow falls as Salesforce slide tempers debt deal cheer

  • Markets
  • Friday, 02 Jun 2023

The Dow was down 93.94 points, or 0.29%, at 32,814.33, the S&P 500 was up 3.98 points, or 0.10%, at 4,183.81, and the Nasdaq was up 21.26 points, or 0.16%, at 12,956.54. — Reuters

BENGALURU: The Dow fell on Thursday after dismal earnings from Salesforce tempered optimism sparked by passage of a bill by lawmakers to suspend the nation's debt ceiling and bets that the Federal Reserve will skip raising interest rates in its next meeting.

The bill to suspend the US$31.4 trillion debt ceiling on Wednesday passed with majority support from both Democrats and Republicans and will now head to the Senate, which must enact the measure before a Monday deadline, when the government is expected to run out of money to pay its bills.

Dragging the Dow Jones Industrial Average, Salesforce Inc fell 5.5% after the company posted its slowest pace of revenue growth in 13 years.

Even after the passage of the bill, trading remained in a narrow range as investors focused on economic indicators, which will set the tone for the US Federal Reserve and provide more details on the impact of its aggressive interest rate-hiking cycle on the economy.

The ADP National Employment Report showed the economy added more jobs than expected in May, while the Labour Department's weekly jobless claims increased modestly, both suggesting the labor market's resilience.

These reports come before the Labour Department's closely watched May jobs data, due on Friday.

Separately, data showed US manufacturing contracted for a seventh straight month in May.

The odds favouring a pause in rate hikes at the Fed's June 13-14 policy meeting were around 72% after the datasets.

Comments by Fed officials, including governor and vice chair nominee Philip Jefferson, leaning toward a momentary pause in hikes had helped drive down bets for a hike on Wednesday.

"The passage of the debt bill by Congress, certainly is positive as it moves on to the Senate but it also gives the Fed less opportunity to perhaps conclude with the restrictive monetary policy," said Peter Cardillo, chief market economist at Spartan Capital Securities.

"So, a pause probably is not likely. Can they skip? That's a possibility, but with the jobs market being so strong and inflation elevated, it does pose a big question mark for the Fed."

At 10:10 a.m. ET, the Dow Jones Industrial Average was down 93.94 points, or 0.29%, at 32,814.33, the S&P 500 was up 3.98 points, or 0.10%, at 4,183.81, and the Nasdaq Composite was up 21.26 points, or 0.16%, at 12,956.54.

Meta Platforms Inc added 2.4%, helping boost the Nasdaq after unveiling its next-generation mixed reality headset named Quest 3.

However, Macy's Inc shed 3.7% and Dollar General Corp slid 16.2% as the retail companies cut their full-year sales forecasts amid high inflation. Inc slumped 17.3% after the artificial intelligence company forecast annual revenue outlook below street estimates.

Advancing issues outnumbered decliners by a 1.33-to-1 ratio on the NYSE by a 1.05-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and 16 new lows, while the Nasdaq recorded 22 new highs and 67 new lows. — Reuters

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