Stock Market News: Dow Hits 40,000

view original post

The stock market did an about face as Thursday trading came to a close, with all three indexes blowing off their gains.

The Dow fell 39 points, or 0.1%, while the S&P 500 fell 0.2% and the tech-heavy Nasdaq declined 0.3%.

The day could have been one for the books. The Dow momentarily crossed a historical 40,000 milestone, while the other main indexes were set for a record close.

Investors were excited about April inflation data coming in a touch lighter than the prior month–-a sign a rate cut could be on the horizon. Earnings have been good, too.

Bonds may have killed the optimism. The yield on the 10-year, a key economic indicator that sets the mortgage and credit card interest rates, closed at 4.376%, reaching its highest level of the session and breaking a three-day streak of declining yields.

Dueling narratives were at play.

Industrial production stagnated in April and data on factory activity in the Philadelphia region showed a slowdown. On the other hand, initial jobless claims slipped from a week ago, a positive sign for the labor market.

“Thursday’s data delivered precisely the mix of indicators that offers fodder to both the bulls and the bears,” wrote Ian Lyngen, head of U.S. Rates Strategy at BMO Capital Markets.

No big economic release releases are scheduled for Friday, and while the Fed’s Christopher Waller speaks before noon, chances are slim he will shift policy messaging.

The stance is clear–no hikes and no cuts unless there is a sustained move lower in inflation or a break in the labor market.

Pay attention to the bond party.