On Thursday, May 4, 2023, major U.S. stock indexes closed lower, with the S&P 500 Index down 0.38%, Dow Jones Industrial Average down 0.63%, and Nasdaq 100 down 0.12%. June E-mini S&P futures fell by 0.42%, and June E-mini Nasdaq futures fell by 0.18%. This decline followed doubts about a potential U.S.-Iran peace deal, as crude oil prices recovered from earlier losses, pushing bond yields higher.
Economic data released on the same day showed U.S. weekly initial unemployment claims rising by 10,000 to 200,000, which was better than expectations of 205,000. Additionally, Q1 nonfarm productivity increased by 0.8%, surpassing the estimated 0.6%, and March consumer credit rose by $24.855 billion, well above projections of $13.720 billion. In the corporate sector, 84% of S&P 500 companies that reported Q1 earnings exceeded estimates, with a projected year-on-year earnings increase of 12%.
Goldman Sachs estimated that disruptions from geopolitical tensions related to the Strait of Hormuz could lead to a drawdown of nearly 500 million barrels from global crude stockpiles, potentially reaching 1 billion by June. The markets are currently pricing in a mere 4% chance of a -25 basis points rate cut at the upcoming FOMC meeting on June 16-17.
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