US stocks opened on a mixed note on Thursday, as hopes for rate cuts and AI growth that have recently buoyed markets faced headwinds, putting the spotlight on upcoming earnings reports to provide momentum.
The Dow Jones Industrial Average (^DJI) dipped by approximately 0.2%, signaling a potential struggle following a six-day winning streak. The S&P 500 (^GSPC) remained near the flatline, while the Nasdaq Composite (^IXIC) edged up by almost 0.2%.
Stocks have lost their momentum as a growing number of Federal Reserve officials emphasize that interest rates will need to stay higher for longer, with stubborn inflation being the main concern. The optimism for a potential rate cut in the summer rather than the fall has faded.
Meanwhile, the initial weekly jobless claims data released on Thursday showed an increase to 231,000, up by 22,000 from the previous week, signaling a slowdown in the job market.
The benchmark 10-year Treasury yield (^TNX) rose near the 4.5% level on Thursday, proving to be a drag on growth stocks, particularly megacap Big Techs.
However, hopes for AI growth took a hit after Arm (ARM) provided a downbeat annual revenue forecast, causing doubt among investors. Arm’s shares plummeted by 9% in pre-market trading, while sector peers Nvidia (NVDA) and AMD (AMD) experienced slight declines.
Warner Bros. Discovery (WBD) reported earnings before the bell, missing estimates and failing to provide support for investors. Shares in the media company dropped by 4%. Roblox (RBLX) and Yelp (YELP) are among the companies on the docket for Thursday as the earnings season nears its end.
Oil prices edged higher after a mixed snapshot of US inventories, including a drop in nationwide crude holdings. Prices are recovering from a recent weakness, with benchmark Brent futures trading near $84 a barrel on Thursday. Despite a 1.36 million-barrel weekly draw in total crude stockpiles, inventories at the Cushing storage hub climbed to the highest since last July.
On Thursday, mixed US stocks faced headwinds as hopes for rate cuts and AI growth waned, shifting focus to upcoming earnings reports. As markets navigate through uncertainties surrounding interest rates, job market trends, and corporate earnings, investors are closely monitoring the next batch of earnings reports for clues on market direction and economic recovery.
