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US close: Stocks slump on strong data as Powell dampens rate-cut hopes

(Sharecast News) - US stock markets declined on Monday on the back of disappointing results from fast-food giant McDonald's and comments from Federal Reserve chair Jerome Powell, who said that the central bank was in no rush to cut interest rates. Powell echoed comments made at the Fed's most recent monetary policy meeting, saying that the "economy's in a good place" after resilient economic data over the past few months. "Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates," he said.

Adding more weight to his argument was a particularly strong result from the Institute of Supply Management's non-manufacturing PMI on Monday which came in ahead of analysts' forecasts.

The Dow finished 0.7% lower at 38,380.12, the S&P 500 fell 0.3% to 4,942.81, while the Nasdaq slipped 0.2% to 15,597.68.

"Markets managed to shrug off Friday's stellar payrolls report, but today's ISM services PMI seems to have dealt the death blow to any lingering hopes that a March rate cut was still on the cards," said Chris Beauchamp, analyst at IG.

The ISM services PMI increased to 53.40 points in January, up from 50.50 points in December 2023 and well ahead of the 52.0 consensus forecast. This was the strongest reading in four months as new orders, employment and supplier deliveries improved month-on-month.

Meanwhile, further dampening market sentiment on Monday was a 14.5 basis-point increase in the 10-year US Treasury yield to 4.168%.

McDonald's slumps on sales miss

Shares in McDonald's slumped nearly 4% after the company missed analysts' forecasts with its fourth-quarter sales. Global comparable sales increased 9% over 2023 as a whole but growth tailed off to just 3.4% in the fourth quarter, which the company blamed on the war in the Middle East. The chain had come under fire in recent months after offering discounts to Israeli soldiers, prompting boycotts across the wider region, while some stores had to temporarily close as a result of protests.

Fourth-quarter adjusted diluted earnings per share rose by 14% to to $2.95, ahead of the $2.82 expected by the market, but revenues of $6.41bn missed the consensus estimate of $6.45bn.

Social media group Snap also finished in the red after announcing plans to cut a tenth of its global workforce - thought to be around 500 people - as part of a restructuring plan that will cost between $55m and $75m.

Novo Holdings, the controlling shareholder of Novo Nordisk, has agreed to buy US drug maker Catalent in a $16.5bn cash deal, causing shares in the latter to jump 10%.

In other earnings news, Caterpillar, Tyson Foods and Estee Lauder all beat forecasts with their latest quarterly results, causing shares in the three stocks to rise strongly.

Dow Jones - Risers

Caterpillar Inc. (CAT) $321.11 1.91% Apple Inc. (AAPL) $188.11 1.22% Salesforce.Com Inc. (CRM) $288.36 0.95% Intel Corp. (INTC) $42.83 0.55% Procter & Gamble Co. (PG) $158.86 0.49% Chevron Corp. (CVX) $152.72 0.32% Merck & Co. Inc. (MRK) $126.61 0.16% Amgen Inc. (AMGN) $323.27 0.02% Dowdupont Inc. (DWDP) $0.00 0.00% JP Morgan Chase & Co. (JPM) $174.54 -0.11%

Dow Jones - Fallers

McDonald's Corp. (MCD) $286.23 -3.64% Walgreens Boots Alliance, Inc. (WBA) $22.14 -2.21% 3M Co. (MMM) $92.80 -2.18% Verizon Communications Inc. (VZ) $41.37 -1.80% Microsoft Corp. (MSFT) $405.14 -1.48% Boeing Co. (BA) $206.34 -1.45% Cisco Systems Inc. (CSCO) $49.52 -1.32% Unitedhealth Group Inc. (UNH) $503.93 -1.23% International Business Machines Corporation (CDI) (IBM) $183.56 -1.20% Nike Inc. (NKE) $99.53 -1.17%

S&P 500 - Risers

Estee Lauder Co. Inc. (EL) $150.99 12.58% Idexx Laboratories Inc. (IDXX) $571.24 8.37% Eli Lilly and Company (LLY) $706.77 5.86% Nvidia Corp. (NVDA) $690.93 4.43% Affiliated Mgrs Group (AMG) $156.27 4.42% Qorvo, Inc. (QRVO) $107.34 3.62% Nektar Therapeutics (NKTR) $0.57 3.50% Marathon Petroleum Corporation (MPC) $171.03 2.83% HF Sinclair Corporation (DINO) $57.74 2.16% Tyson Foods Inc. (TSN) $57.54 2.09%

S&P 500 - Fallers

Air Products & Chemicals Inc. (APD) $218.24 -15.47% Hanesbrands Inc. (HBI) $4.43 -7.04% Archer-Daniels-Midland Co. (ADM) $52.93 -4.96% Ford Motor Co. (F) $11.56 -4.78% Charter Communications Inc. (CHTR) $304.31 -4.67% Humana Inc. (HUM) $361.50 -4.58% Advance Auto Parts (AAP) $64.86 -4.32% Albemarle Corp. (ALB) $109.32 -4.32% Foot Locker Inc. (FL) $28.28 -4.17% Carnival Corp. (CCL) $15.77 -4.11%

Nasdaq 100 - Risers

Idexx Laboratories Inc. (IDXX) $571.24 8.37% Nvidia Corp. (NVDA) $690.93 4.43% JD.com, Inc. (JD) $22.33 2.53% NetEase Inc. Ads (NTES) $100.69 1.88% Applied Materials Inc. (AMAT) $171.13 1.75% Lam Research Corp. (LRCX) $853.18 1.73% Booking Holdings Inc. (BKNG) $3,619.62 1.64% QUALCOMM Inc. (QCOM) $144.00 1.63% Synopsys Inc. (SNPS) $560.96 1.61% KLA-Tencor Corp. (KLAC) $614.06 1.61%

Nasdaq 100 - Fallers

Charter Communications Inc. (CHTR) $304.31 -4.67% Qurate Retail Inc. (QRTEA) $0.81 -4.54% Tesla Inc (TSLA) $180.52 -3.93% Vodafone Group Plc ADS (VOD) $8.47 -3.09% Meta Platforms Inc. (META) $461.77 -2.78% Liberty Global plc Series C (LBTYK) $20.31 -2.54% Seagate Technology Plc (STX) $85.39 -2.43% DENTSPLY Sirona Inc. (XRAY) $33.37 -2.40% Liberty Global plc Series A (LBTYA) $19.13 -2.30% American Airlines Group (AAL) $14.23 -2.25%

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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