Stock Market Today, May 18: Cautious Mood Nudges Markets Downwards
The S&P 500 (SNPINDEX:^GSPC) slipped 0.07% to 7,403.05, the Nasdaq Composite (NASDAQINDEX:^IXIC) fell 0.51% to 26,090.73 on tech softness, while the Dow Jones Industrial Average (DJINDICES:^DJI) rose 0.32% to 49,686.12 as cyclicals held up.
Market movers
Nvidia reversed early strength to close down 1.3%, as risk-off sentiment weighed on tech stocks. The artificial intelligence (AI) giant is due to report earnings on Wednesday. Micron Technology and Sandisk dropped on memory-sector worries.
Netflix gained 3.0% on renewed analyst optimism. Cryptocurrency weakness pressured Coinbase Global and Circle Internet Group as Bitcoin failed to hold its recent gains.
What this means for investors
Soaring oil prices and continued tensions in the Middle East contributed to another volatile day of trading as caution outweighed recent earnings optimism. WTI crude reached around $108 a barrel, and 10-year Treasuries closed at almost 4.6% after reaching their highest point in a year.
Several recent reports have put the spotlight on inflation, amid soaring wholesale and consumer prices. Not only does stubborn inflation make it harder for the Federal Reserve to cut rates, but markets are now starting to factor in the possibility that rates might increase. That puts pressure on riskier assets, borrowing, and the housing market.
Investors will be watching Nvidia’s earnings for further signals around the sustainability of the AI boom. With valuations close to record highs, some traders are trimming their exposure, while others think the AI rally has further to run. Managing risk and maintaining a diversified portfolio can help to navigate the uncertainty.
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Emma Newbery has positions in Nvidia. The Motley Fool has positions in and recommends Bitcoin, Micron Technology, Netflix, and Nvidia. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.
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